By Colin Packham
SYDNEY, Sept 9 (Reuters) - Australia's cotton production for 2014/15 will drop 35 percent to a five-year low of 580,000 tonnes as dry conditions across the eastern coast forces farmers to abandon planting, the nation's chief commodities forecaster said.
A drop in cotton output at the world's third largest exporter of the fibre may provide support to global prices , which have fallen more than 30 percent in the last five months amid concerns over sluggish Chinese demand as Beijing scraps a stockpiling program in favour of crop subsidies.
The Australian Bureau of Agricultural and Resource Economics and Sciences (ABARES) also lowered its forecast for wheat production by 1.5 percent from its previous estimate as the dryness curbed yields across the east coast of the world's fourth largest exporter of the grain.
But it is production of cotton lint, used in the manufacture of fabrics, that is set to bear the brunt of the dry weather.
Production during the 2014/15 season (July-June) will slide to 580,000 tonnes from a revised 2013/14 cotton forecast of 890,000 tonnes, ABARES said. The bureau had previously forecast 2013/14 production at 910,000 tonnes.
"Over the last few years, there has been good supply of irrigation water but we expected the supply this year to be down on previous years," said Peter Collins, Manager for Agricultural Commodities, ABARES.
Much of the east coast, home to production of cotton in Australia, has seen less than 80 percent of average rainfall over the last year, data from the Australia Bureau of Meteorology shows.
WEIGHING ON WHEAT
ABARES pegged Australian wheat production at 24.234 million tonnes, down from the previous estimate of 24.588 million tonnes made in June.
Production could fall even further, ABARES said, without at least average rainfall over the next few weeks, the critical growing stage for the crop.
The lower production is seen as a result of dry weather across the country's east coast, ABARES said, offset only slightly by higher production in South Australia.
Lower production in Australia will provide support to global wheat prices, with benchmark Chicago Board of Trade prices falling more than 25 percent in the last four months on forecasts for ample world supplies.
Despite some heavy rains across the Australian east coast in recent weeks, the Australian commodities forecaster lowered its projections for output of wheat in New South Wales and Queensland.
Production in New South Wales was lowered by more than 3 percent to 7.02 million tonnes, while output in Queensland was seen sliding 17.5 percent to 1.1 million tonnes.
However, output in Australia's largest producing and exporting state, Western Australia, was left unchanged at 8.4 million tonnes. CBH Group, Australia's largest wheat exporter, though, sees production in the state above the ABARES figure.
The dry weather is also set to curb canola production, ABARES said.
Australian canola production was pegged at 3.388 million tonnes, down 2.4 percent from the previous estimate in June. (Editing by Muralikumar Anantharaman)
