January 31, 2005

 

 

Australia AWB cuts estimated returns on wheat sales

 

Australia's monopoly wheat exporter AWB Ltd. Monday cut its estimate of returns from sales of some wheat grades grown this year ending March 31, 2005.

 

Estimate for its benchmark new crop, Australian Premium White type wheat of 10% protein in the 2004-05 No. 1 pool, were held at returns of A$197 a metric ton, free on board and exclusive of a 10% goods and services tax.

 

But an estimate of returns for this benchmark wheat grade in the 2004-05 No. 2 pool, which is more exposed to global market fluctuations, was trimmed A$3 to A$179/ton, it said.

 

Also reduced were estimates of returns in the No. 2 pool by A$3-A$5/ton.

 

Sarah Scales, general manager of AWB's international unit, said strong global supplies and high stock levels have forced global wheat markets revise returns lower.

 

"A factor of the international wheat market recently has been the presence of high quantities of aggressively priced wheat, particularly from suppliers such as Argentina and Russia," she said.

 

The European Union's plan to reintroduce wheat export subsidies has put a damper on prices, she said.

 

"A combination of these factors helped force futures values to new contract lows in Chicago last week," she said.

 

Estimated returns for higher protein wheat, which rallied last year after frosts in Canada and on some concerns of supply shortages, have fallen back a little, in part reflecting the impact of a big crop of high protein wheat in Australia, she said.

 

Similarly, a large local crop has also cut back estimated returns for noodle wheat in both 2004-05 pools, she said.

 

AWB sells wheat collectively on behalf of growers through a pooling system and attempts to estimate average returns from sales spread across the marketing year, which started Oct. 1.

 

It deducts storage, handling, transportation and other costs before passing on returns to growers.

 

The company exports most of the wheat collected, making it a major global supplier. It also trades in the domestic market.

 

AWB will next update its estimates of pool returns Feb. 14.