The revision by the government's chief commodities forecaster falls short of 1996/97's bumper crop of 23.7 million tonnes but is well ahead of its June projection of only 19.3 million tonnes. The 1997/98 crop was 18.6 million tonnes.

"Excellent growing conditions in most regions are expected to lead to above average yields," Abare said in its latest Australian Crop Report. "As a result, Australian wheat production in 1998/99 is forecast to reach a near-record 23.5 million tonnes, 26 per cent higher than last year."

Abare forecasts that Australia's wheat exports in 1998/99 will rise to 16.5 million tonnes from 14.2 million tonnes in 1997/98. The agency's last forecast, issued in June, was for exports of 14.9 million tonnes in 1998/99.

Areas designated for wheat plantings inAustralia in 1998/99 is estimated at 11.8 million hectares versus 11.1 million hectares last year when Australia produced 19.05 million tonnes.

The increase is driven largely by a reduction in sheep numbers, reflecting a pessimistic outlook for wool prices and expectations among growers that wheat will provide better returns, Abare said.

Abare predicted the key wheat exporting state of Western Australia will yield a record 8.7 million tonnes this year, while production in New South Wales will rise 33 per cent to 6.8 million tonnes.

South Australia, benefiting from widespread rain, should increase its yield 22 per cent over last year to 3.3 million tonnes.

In Victoria, the area planted to wheat has increased only around five per cent but with big improvements in yields, the crop size should rise 43 per cent to 2.4 million tonnes.

Queensland should also see a bumper year, recording a total yield of 2.3 million tonnes.

Abare's latest forecast varies marginally from projections by the Australian WheatBoard Ltd (AWB) and Australian Wheat Forecasters Pty Ltd, who this week put the total yield at between 22 and 24 million tonnes and 21.93 million tonnes, respectively.

Abare also said that an estimated 1.1 million hectares of canola have been planted and production is forecast to reach a record 1.6 million tonnes this season, almost double last year's crop.

Barley forecast at 5.9 million tonnes

Meanwhile, the Australian barley production in 1998/99 has been increased to a likely 5.91 million tonnes, the Abare said.

The commodities forecasting agency boosted its forecast from its previous forecast for 1998/99 of 5.28 million tonnes.

Abare's latest figures, issued in the Australian Crop Report on Tuesday, increase Australia's forecast barley production in 1998/99 to virtually steady with 1997/98, when 5.92 million tonnes were produced.

The increased forecast reflected expected higher yields.

Australia's total winter coarse grains production in 1998/99 is forecast at 7.7 million tonnes,slightly higher than last year.

"So far seasonal conditions have been generally favourable and crops are progressing very well, with excellent yield potential," Abare said.

Final yields will depend on weather conditions in the critical September-October period, it said.

Australian growers have responded to the relatively poor price outlook for feedgrains by reducing the area sown to winter feedgrains, it said.

Total winter coarse grains area are estimated to have fallen by eight per cent to just under four million hectares in 1998/99, it said.

The Australian barley area is estimated to be down by nine per cent to just under three million hectares.

However, the proportion sown to malting varieties has increased across all states, it said.

Rice forecast cut to 1 million tonnes

Abare has, however, cut its forecast of Australia's rice production in 1998/99 to one million tonnes.

This is down from Abare's previous forecast for 1998/99 production of 1.2 million tonnes, and down further onthe 1.3 million tonnes produced in 1997/98.

Irrigation water supplies available for 1998/99 remain low, Abare said in its latest Australian Crop Report, issued on Tuesday.

"Based on current water availability and average yields,rice production is forecast to fall by 24 per cent to 1.01 million tonnes," it said. Australia's 1997/98 rice crop of 1.34 million tonnes was nearly four per cent less than the record 1996/97 harvest.