January 18, 2011

 

Australia's wheat exports set off

 

 

Australia's exports are set off to a rapid start to 2010-11 after the shortage of international supplies of wheat shipments of the Black Sea.

 

This was before the floods in Queensland started, so it is expected that the country will be struck by soaring prices.

 

Australia's wheat exports jumped 20% to 919,000 tonnes in November, the second month of the country's marketing year, according to the country's statistics bureau.

 

Added to the 1.64 million tonnes in October, the best monthly figure for more than two years, the result took shipments for early 2010-11 some 70% higher than a year before as importers scrambled to replace supplies lost from Russia and its neighbours following drought-devastated harvests.

 

Shipments from South Australia were, at nearly 750,000 tonnes, up sevenfold in the two months.

 

However, the data represent a period before the worst of the rains hit Australia, causing floods in Queensland and northern New South Wales, and which continued on Monday (Jan17).

 

It is also said that late harvest and grain movement on Australia's east coast will continue to be battered by horrific weather. Yields and quality in crops that are not yet harvested will decline, while the movement of harvested grain to end users will be delayed.

 

It is unclear as yet how significantly logistical difficulties will impinge directly on Australia's export progress.

 

Queensland is a minor exporting state. And while New South Wales is a major shipper, and saw its stocks tumble 24% year-on-year in November thanks to the rain that caused harvest delays, the state's bulk crop handlers still had 2.7 million tonnes in store at the end of the month.

 

However, the setbacks have, since the end of November sent Australian wheat prices flying. With benchmark east coast milling wheat standing at AUD350 (US$348.07) a tonne on Monday (Jan 17), it is, according to Mathews, "the most expensive wheat in the world".

 

AWB, Australia's former wheat export monopoly, reported two weeks ago that "Australian wheat was essentially priced out of the world trade" before the Christmas period.

 

It also added, "Harvest delays had caused quite a run-up in Australian cash prices, to well above international values."

 

"Aggressive" sales by farmers since Christmas had brought cash prices under pressure more recently, meaning ABW was "now seeing Australian wheat being much more competitive into export markets and export sales occurring".

 

AWB is in the process of seeing its grain handling operations sold on by Canadian buyer Agrium to agribusiness giant Cargill.