January 4, 2008

 

Bountiful grain harvest for Australia seen this year

 

 

After battling with drought last year, Australian grain growers are looking forward for a good harvest in 2008, with the current wheat price now US$130-per-tonne higher than the previous record price.

 

Grain market analyst Malcolm Bartholomaeus said Australian farmers who had been able to grow a wheat crop would enjoy the high world prices.

 

He said the Australian Wheat Board's pool return this year is currently estimated to net growers with payments to reach U$360 per tonne. Bartholomaeus said previous record high from the export pool was $236 per tonne back in 1995.

 

This year, high prices and normal yields can post an all-time record in gross income per hectare across the grain belt, he said.

 

Wheat prices peaked in December, breaking the US$10-per-bushel barrier for the first time, then came back a little over Christmas.

 

But with traders now back at work, and a Pakistani buying tender, the price had started moving up.

 

With tight global stocks, no relief is still seen in sight until the next northern hemisphere crop comes in, he said. 

 

The US Department of Agriculture estimated that the US ended 2007 with the lowest wheat stocks for 60 years.

 

Bartholomaeus said the market had been expecting an increase in global production but bad weather in grain-growing areas cut production. Though global output did actually went up last year, it is not enough to cover current consumption levels and so stock levels continued to decline.

 

Corn futures already hit an 11-year high in Chicago, and soy approached a 34-year high. Those prices were driven by crude oil hitting US$100 a barrel.

 

He expects prices to remain high, though not necessarily at the current level. Wheat prices are seen above US$300 per tonne for the 2008 harvest.