After Good Early Rains, Australian Farmers Planting Wheat, Crossing Fingers - Reuters

[hatrack]

EDIT

Last year, farmers lost millions of dollars when they planted large areas with wheat after good rains only to then lose their crops and their investments when drought set in again. The government, however, is optimistic. Even after a 9 percent cut in its forecast of Australia's 2008/09 wheat crop on June 17, the government is still forecasting a big crop of 23.68 million tonnes, up by more than 80 percent on last year's drought-affected crop.

An Australian crop of this size, together with forecast big European crops, will be enough to pull world wheat prices back from recent highs, brokers believe.

"A better rainfall situation in Australia might start to see the markets work their way lower," futures broker Garry Booth of MF Global said. This year might be the first time in years that the world produces more wheat than it consumes, Greentree said. Driven by shortages and strong demand, world wheat prices have been on a roller-coaster ride for a year.

They soared by over 150 percent between mid-2007 and March 2008 after crop failures in Australia and elsewhere, then fell by over 40 percent by the end of May this year as crop prospects improved, then gained over 20 percent on crop-damaging floods in the United States and dry weather in Australia's planting season.

EDIT

http://www.planetark.org/dailynewsstory.cfm/newsid/48978/story.htm

[kestrel91316]

1. My money is on ANOTHER drought year. What happens THEN?

Early rains count for nothing. They can shut off at any time and you are still screwed.

We had an auspicious start to our rainfall this winter in SoCal. But it all fizzled halfway and here we are facing terrible drought, so terrible they are actually prohibiting people from spraying down their driveways and sidewalks.........how will Angelenos survive???

[hogwyld]

2. Considering where global stockpiles stand

Another drought would have disasterous consequences for a global famine.