Commonwealth Bank of Australia raised doubts over Australia hanging on to second place among world wheat exporters by forecasting a slump of nearly 30% in shipments, to a level well below official estimates.

The bank forecast that the country's wheat shipments will tumble to 17.8m tonnes in the 2012-13 marketing year - which has, with the harvest, just started in Australia.

The estimate is far below the 21.5m tonnes forecast by Abares, Australia's official commodities bureau, and by the International Grains Council, and a 21.0m-tonne estimate from the US Department of Agriculture, whose data set world benchmarks.

And it would, on current USDA figures, demote Australia behind Canada as well the US in the world wheat exporters' league.

The estimates also imply tougher competition for wheat among importers at a time when available supplies in big exporting nations have already been hit by poor weather in parts of Europe and, in particular, the former Soviet Union.

Shrunken inventories

Indeed, CBA, in a report trailed by Agrimoney.com on Thursday, said that its forecast reflected in part the clamour for Australian wheat in the newly-finished 2011-12 season, when, on its estimates, shipments hit a record 24.9m tonnes.

"The record export programme reflects record local supplies, weak local basis, strong international wheat demand, and shrinking supplies in other key exporting regions," CBA agri commodities analyst Luke Mathews said.

The pace of shipments left inventories with bulk handlers at 6.5m tonnes at the end of last season, a drop of 1.8m tonnes year on year.

Harvest downgrade

And hopes for replenishing elevators have been hurt by the dryness which has left Australia looking at a sharp drop in production from last season's 29.5m-tonne crop.

"Production prospects have been downgraded around the country," Mr Mathews said, signalling that a further cut to estimates was possible if rain was not forthcoming.

 "Further rainfall in October is needed to maintain our revised production potentials. Topsoil moisture reserves are minimal and temperatures are warming."

Price signal

The implications of the lower export hopes looked set to be felt largely in South Australia, where supplies are set to fall 2m tonnes to 4.2m tonnes in 2012-13.

This implies that the state - in which Viterra, the crop merchant being bought by Glencore is the dominant grain handler – "will be a far less aggressive exporter of wheat in 2012-13 compared to the previous two seasons", Mr Mathews said.

In the east coast, wheat supplies will drop to 13.3m tonnes from 18.7m tonnes in 2011-12, with Western Australian supplies proving the most resilient, and able to "support a strong export programme over the coming year".

The drop in east coast supplies bodes well for local prices, which against Chicago values "are likely to appreciate by more than we expected earlier in the season", Mr Mathews said.

"Our expectation is for local basis versus Chicago wheat) to appreciate to Aus$5-15 per tonne over the coming 12 months."