Analysts have rejected an official forecast that Australia's wheat crop will rise next season, saying weak prices will encourage farmers to plant alternative crops such as cotton and chickpeas.

Both Commonwealth Bank of Australia and Rabobank have pegged Australia's wheat production falling by some 1.5-2m tonnes to 20m tonnes in 2010-11.

The estimate is nearly 2m tonnes lower than a prediction earlier this week from Abare, Australia's official commodities bureau, which forecast higher yields more than making up for a small drop in sowings.

Rabobank estimated that sowings could fall below 13m hectares, short of the Abare estimate by at least 750,000 hectares, as the soft global wheat market prompts farmers to look at other crops.

"A lack of clear price direction, higher carry‐over stock levels and improved pricing for alternate crops such as cotton and pulses will weigh on wheat plantings for this year," Rabobank said.

'Relatively weak outlook'

CBA analyst Luke Mathews said: "The weak international price outlook, plus expectations for a firm Aussie dollar over the coming nine-to-12 months, means the near-term outlook for local wheat prices is relatively weak."

A strong currency would act as a disincentive by reducing the competitiveness of exports from Australia, the world's fourth-ranked wheat-shipping country.

The bank said it expected a 5% drop in sowings, a number which, plugged into official data, infers a plantings estimate of about 13.1m hectares.

Meanwhile, inventories were on their way to 10% growth over 2009-10, and might rise by more if exports fall short of an "optimistic" target of 15.7m tonnes, he added.

'Another large crop' 

Rabobank's comments came in a report in which it said there was "little to be optimistic about" for world wheat prices, despite its Australia sowing forecast and a slump in US winter wheat plantings to their lowest since 1913.

The European Union wheat crop will rise by 4% to 144m tonnes, as farmers switch to the grain from barley, for which market conditions have been even less favourable.

Argentine farmers, who cut wheat plantings by 34% last year in the face of drought, would raise sowings this year.

"An El Niño weather pattern has brought plenty of rains to the region and is promising a wet autumn in Argentina, which will be favourable for wheat plantings starting in June," Rabobank said.

"Current conditions [point] to another large world wheat crop in 2010."