Australian Grains - Prices squeezed higher by drought, concern over El Nino forecast:: By Michael Byrnes SYDNEY, (Reuters) - Australian wheat farmers face a double uncertainty as they finish winter planting, as drought hits crop prospects and the AWB Iraq kickbacks scandal casts doubts over where they can sell what they do produce. The industry's two great dilemmas are coming to a head at the same time. The planting window for this season's crop will be completely closed in two weeks' time, and an official inquiry into the national wheat export body AWB Ltd. is due to report on Sept. 29. The wheat industry is braced for the possible return of the 2002 drought, Australia's worst in 100 years, with dry weather persisting after the late arrival of planting rains in mid-June. The weather bureau also warned this week that a possible new drought-inducing El Nino condition was shaping up. The trade expects that Australia's 2006/07 wheat crop will fall by 20 percent to 17-18 million tonnes, because of drought. It could be much worse. The 2002 drought cut the crop to just 10 million tonnes. "There's been a big investment out there in planting the crop and at this stage if it doesn't rain it will be lost," Jock Laurie, President of the New South Wales Farmers Association, told Reuters this week. Speaking after an inspection of crops around the state, the head of Australia's biggest farmers organisation said that crop losses could be "massive". ASX Australian grains futures prices continued to rise this week, on shortage fears. Milling wheat futures rose to A$245 a tonne ($187) on Friday, up from A$228 last Friday, while barley futures rose to A$228 from A$214 last week. ($1=A$1.31) END
