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Rains refresh Aussie crops, but miss sheep farms

Rains which have "saved crops from failing" in some parts of eastern Australia did not extend far enough to revive pasture conditions, undermining hopes for an end to a long-term slide in national wool production.

Rainfall this month in Queensland and northern New South Wales, where a dearth of moisture had raised concerns for crops entering spring, "boosted wheat yields and, in some instances, saved crops from failing", Australia & New Zealand Bank said.

However, the precipitation "did not push south into key wool producing areas", some of which have received less than half the normal rainfall expected for August, the bank said.

This has raised "some small doubts" over pasture condition, and in turn over the ability of wool production in Australia, the top exporter, to recover from a record low.

"Rainfall in the next month will be critical for a strong rebound in national fleece weights in 2014-15," which began last month.

'Headwind for wool'

A rise in fleece weights is crucial if Australia is to maintain wool output, with the country's sheep flock back in decline, after a rebuild in numbers in 2010 and 2011.

In 2013-14, the flock shrank by 2.5m head according to ANZ, Abares, the official commodities bureau, putting the decline at 3.8m head.

The decline "creates a headwind for wool production in 2014-15," ANZ analyst Paul Deane said.

However, improved pasture conditions earlier this year had created hope for improved fleece weights.

Production forecasts

Indeed, weights "should be notably higher" in the July-to-September quarter, compared with the same period last year, whatever the weather.

"What is at risk, should spring pasture growth disappoint, is the potential for lower fleece weights from sheep shorn in the first half of 2015," Mr Deane said.

The bank has forecast wool production stabilising at 345m kilogrammes, on a greasy basis, in 2014-15.

Abares foresees output of 330m kilogrammes which, on its data, represents a fall of 10m kilogrammes.

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