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February 9, 2011

 

AWB followers talk about Australian feed wheat delivery to EU

 

 

Australia's wheat marketer, AWB, has fuelled speculation of a leap in securing its first feed wheat shipments to Europe, with declining interest from the region and Asian traders.

 

Mitch Morison, the AWB general commodities manager, highlighted Europe, as well as traditional Asian buyers South Korea and the Philippines, as showing "interest" in Australian feed wheat in the face of buoyant prices of corn, an alternative feed source.

 

The comment from Australia's former wheat export monopoly follows considerable speculation that the country may already have secured feed wheat orders to Europe, whose own supplies have been sapped by bumper exports and willingness among some buyers to lower specifications for food grain.

 

AWB, whose crop handling operations are being bought by Cargill, also highlighted that the wave of grain buying by Middle Eastern countries, which has made waves in the wheat market, may have reached barley, with Saudi Arabia, "starting to make inquiries", and Jordan tendering.

 

Australian grain is at a disadvantage in selling into Europe of shipping costs to Europe, of some US$40 a tonne or more.

 

Nonetheless, Australia won an Egyptian milling wheat tender over the weekend with prices US$35 a tonne cheaper than French supplies; a result which FC Stone's Jaime Nolan said "highlights the competitive nature of Aussie exports at the minute".

 

Furthermore, some EU countries have urged lower wheat import tariffs to facilitate purchases from outside the region, a request that is still being considered, a European Commission spokesman said.

 

It is as yet unclear whether the matter will be raised at a meeting on Thursday of grains experts from EU states.

 

Portugal and Spain are considered likely destinations for non-EU grain, with the Netherlands also showing a strong appetite to judge by export data from the UK, a core European shipper of feed wheat.

 

Some EU countries have urged lower wheat import tariffs to facilitate purchases from outside the region, a request that is still being considered, a European Commission spokesman said.

 

It is as yet unclear whether the matter will be raised at a meeting on Thursday of grains experts from EU states.

 

Portugal and Spain are considered likely destinations for non-EU grain, with the Netherlands also showing a strong appetite to judge by export data from the UK, a core European shipper of feed wheat.

 

Australian wheat exports are already running far ahead of last season's levels, official data on Tuesday (Feb 8) showed, coming in 47% higher for the October-to-December period the first three months of the country's 2010-11 crop year.

 

And further strong shipments lie ahead, with grain committed for export, but not yet shipped, reaching 6.4 million tonnes in December, double the level a year before.

 

"Strong global wheat prices and the withdrawal of Russia from the market contributed to the strength in exports," analysts at Australia & New Zealand Bank said.

 

Prospects have also been boosted by a bumper east coast crop, in terms of quantity if not quality.

 

However, AWB acknowledged the logistical blow dealt by flooding in east coast states, mentioning barley shipments specifically.

 

"One of the challenges in moving barley from Australia is the logistics problems created by the flooding and transport infrastructure damage in eastern regions," Mr Morison said.

 

"Most buyers are now aware that supply routes will be slower and more costly, so much inquiry is focused on when supply can be secured."

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