The world's third largest wheat exporter produced 25.1 million tons last year but ongoing drought has had a devastating affect on this year's crop. Brett Stevensen, managing director at AgRisk Management, told Bloomberg that production may drop below the all-time low of 9.6 million metric tons in 2002. "The crop in Western Australia was still better in 2002 compared with the crop there now," he told the news agency. However industry body the Grains Council of Australia says prices will need to climb higher before imports are necessary. "Claims that domestic prices are nearing import parity are not accurate. Our calculations indicate that the cost of landing new season wheat from Western Australia or South Australia into Sydney, Newcastle and Brisbane is about $320 a tonne," said chairman Murray Jones in a statement yesterday. "The cost of importing soft red wheat from the US Gulf, Canada and the Pacific North West (PNW) is about $330/T, with supplies from the EU $40/T higher to metropolitan mills. Sorghum from the Gulf and PNW is about $309/T. This means that domestic prices have to firm another $30 to $40 before we reach real import parity". He added that importing grain would be bad news for grain and livestock producers mainly due to the quarantine risks. "We would prefer to see grain destined for export diverted to the domestic market. We need to look after the domestic sector, as it is our fastest growing market."The GCA added that it needs more funding from the government and the wheat industry to allow it to get an accurate picture of stocks."This year's harvest may be as bad as 2002/03, but we don't know because there is a big gap in our data. We just don't know how much of our largest grain crop, wheat, is in the storage system or where the stocks are," explained Jones.Greater transparency of stocks would help to dampen market speculation, he added. December wheat started trade today 16 cents higher and soared 30 cents higher on the day. Fund buying was the predominant driver along with concern about global supply, according to the Australian Wheat Board."If we're looking at a cereal crop of around 13 million tonnes (wheat and barley) it's going to be a very tight year for grain supplies," said Jones.