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* Australia set for third-biggest wheat crop
* Hot, dry conditions curb summer crop production
* Cattle farmers to struggle to source feed
(Updates to add link to graphic)
By Colin Packham
SYDNEY, Feb 11 (Reuters) - Australia, the world's second-largest exporter, raised its forecast for 2013/14 wheat output by 3 percent, as strong production in Western Australia state pushed the crop above 27 million tonnes for only the third time.
The upgrade by the government's official forecaster will add to bumper global wheat stocks, and may put further pressure on prices which are sitting not far off recent three-and-a-half year lows.
The Australian Bureau of Agriculture and Resource Economics and Sciences (ABARES) forecast the just harvested wheat crop at 27.013 million tonnes, the third highest on record, up from a December estimate of 26.213 million tonnes.
"The forecast puts ABARES in line with most of the trade estimates, driven by exceptional production out of Western Australia," said Luke Mathews, commodities strategist at the Commonwealth Bank of Australia.
Wheat production in Western Australia, the country's largest grain producing state, is seen at 10.5 million tonnes during the 2013/14 season, up 58 percent from the previous year.
Increased production from Australia may undermine the latest forecast by the U.S. Department of Agriculture, which surprised the market by cutting its estimate for U.S. ending stocks on strong export demand.
"A reduction in expected exports from Australia during the July-June world trade year also raises prospects for 2013/14 U.S shipments," USDA said.
Chicago Board of Trade prices
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SUMMER CROP WOES
While winter crop production was seen at near record levels, ABARES confirmed widespread damage to Australian summer crop production from drought conditions along the east coast.
The forecaster cut its estimate for sorghum production by 21 percent to 1.278 million tonnes, down from actual production of just over 2 million tonnes a year ago.
A smaller summer crop will add to the troubles of Australian cattle farmers, particularly in the country's biggest livestock producing state of Queensland, who have struggled to find sufficient feed.
"Grain supplies in the northern New South Wales and Queensland areas are going to be very tight until the winter wheat crop is harvested and that is many, many months away, and this is going to worry cattle farmers," said CBA's Mathews.
Drought in Queensland has forced ranchers to cull cows, stoking fears of a global beef shortage in coming years given the U.S. herd is at its lowest in six decades. Australia is the world's third-biggest cattle exporter.
Sorghum production in New South Wales was seen at 364,000 tonnes, down 37 percent from ABARE's previous estimate, while Queensland output was seen at 910,000 tonnes, down 11.3 percent.
For other winter crops, Australian canola production in 2013/14 was seen at 3.548 million tonnes, up from a previous forecast of 3.41 million tonnes.
Australian cotton production was revised down to 940,000 tonnes, from a previous forecast of 975,000 tonnes.
(Reporting by Colin Packham; Editing by Richard Pullin)
((colin.packham@thomsonreuters.com)(+61-2 9373 1812)(Reuters Messaging: colin.packham.thomsonreuters.com@reuters.net))
Keywords: AUSTRALIA WHEAT/