The erratic expectations for Australia's wheat harvest took a step backwards as Commonwealth Bank of Australia slashed its forecast for east coast crops, citing frost, and dryness which meteorologists see continuing.
Commonwealth Bank of Australia cut by 1.6m tonnes to 23.6m tonnes its forecast for the wheat crop in the southern hemisphere's top exporter of the grain, ahead of Argentina.
The downgrade highlighted the sharply divergent expectations for the harvest, contrasting with an upgrade to 25.9m tonnes two weeks ago by Australian Crop Forecasters in its production estimate.
However, CBA, while agreeing with ACF over the strong potential for the harvest in Western Australia, the country's top wheat producing state, took a downbeat view over prospects for production in eastern areas.
"Adverse seasonal conditions have engulfed much of New South Wales and Queensland over the past two months, resulting in sharply lower yield potentials," CBA analyst Luke Mathews said.
"A luckless blend of hot-windy days and cold-frosty nights has hurt yield potential.
"Moisture stress and frost damage is evident across much of New South Wales," with most of the state not seeing significant rains since mid-September.
Mr Mathews flagged "a number of reports" of wheat crops, including in the state's Riverina region, "being cut for hay because of frost damage".
Indeed, "crops in the Riverina and northern Victoria have lost yield potential over the past 30 days as a result of depleting moisture reserves, intermittent hot-windy days and frost".
The comments came as official Australian meteorologists forecast continued hotter and drier than average conditions across much of the country over the next three months.
"The chances of the November-to-January maximum temperature exceeding the long-term median maximum temperature are greater than 60% over most of Australia, except for the southwest of Western Australia," the Bureau of Meteorology said.
"The chances of below-average rainfall are 60-70%" in eastern areas.
This bodes ill for the chances of yield recovery in later-harvested areas - but at least implies a swift harvest, and lower risk of the quality damage caused by rainfall on ripe crops, as Australia suffered two weeks ago when much of its production was downgraded to feed.
Indeed, separately, barley consultancy RMI Analytics said it was "time for the taps to turn off in Australia" to preserve crop quality, which looks like being "above average" for the grain, which is harvested a little earlier than wheat.
'Support local basis'
CBA said that the prospect of a disappointing harvest bodes well for prices, given that it means wheat inventories "are likely to tighten considerably in the second half of the marketing year", which in Australia starts this month.
"This should support local basis through 2014."
Nonetheless, forecasts for the Australian harvest remain disparate, ranging from CBA's 23.6m tonnes to 26.7m tonnes expected by Ikon Commodities.
And while there have been worries over the quality of some east coast crops, these were countered on Tuesday by GrainCorp which said that, in Queensland's Emerald zone, where much of the harvest is already finished, "quality remains excellent overall with good levels of protein".