January 22, 2008

AWB's estimated returns on export wheat sales jump

Australian wheat exporter, AWB Ltd., Monday sharply raised its estimate of pool returns for the crop harvested late in 2007, citing ongoing strength in the global wheat market.

AWB's estimated gross return on its leading pool for new crop benchmark Australian Premium White grade of 10.5 percent protein rose AUD20 to AUD439 a tonne, FOB, Australian Prime Hard grade of 13 percent protein rose AUD20 to AUD454/tonne and feed grade rose AUD20 to AUD345/tonne.

AWB closed deliveries to the number 1 pool in some southern port areas at 0600 GMT Monday and again warned that this pool in other areas could be closed at any time, forcing growers to deliver to the lower-returning number 2 pool.

David Johnson, general manager of the pool, said international wheat cash prices and US wheat futures continued to strengthen in the past two weeks, mainly driven by strong demand out of Asia and the Middle East.

AWB, the majority exporter from Australia, pools returns from its collective export wheat sales and deducts costs before paying growers. Sales from a pool can continue for more than 18 months after harvest, depending on production and demand.

Australian wheat production in 2007 reached around 13 million tonnes, up from an actual 10 million tonnes in 2006 but still barely half the 25 million tonnes produced in 2005.

After domestic wheat demand of around 7 million tonnes is met, the balance is available for export, usually making Australia a major global supplier of wheat.

US$1 = AUD1.16 as of January 22, 2008