Australia's wheat crop is set to fall by more than a quarter this season, a government report said Tuesday, as farmers face dry conditions and a surge in fuel and fertiliser prices fed by conflict in the Middle East.

Skyrocketing diesel and fertiliser costs encourage a domestic retreat from wheat as local growers pivot to barley and canola to try and protect profitability.

Australia's wheat crop is set to fall by more than a quarter this season, a government report said Tuesday, as farmers face dry conditions and a surge in fuel and fertiliser…