February 11, 2009

Agribusiness AWB Ltd. (AWB.AU) has lost a "significant" share of Australia's wheat export market to new entrants, with Cooperative Bulk Handling Ltd. now the biggest exporter, Citigroup Global markets reported.

While actual tonnages can be difficult to gauge, estimates based on shipping schedules issued by major logistics providers suggest AWB has accounted for just 17 percent of wheat exports from the latest harvest.

This compares with 31 percent for CBH, 12 percent for Cargill Australia, 11 percent for ABB Grain, 7 percent for GrainCorp, 6 percent for Futuris Corp. and 5 percent for Glencore, with others accounting for the rest, according to Citigroup analyst Jonathan Snape.

AWB operated a bulk wheat export monopoly from Australia for more than 60 years until the government changed the system July 1, 2008 and started accrediting other exporters. There now are 22 companies accredited to export bulk wheat, after the regulator announced Tuesday Noble Resources Australia had been accredited.

Snape was commenting after AWB said Tuesday growers have delivered 2.5 million tonnes to the company's collective sales pool, a figure it hoped would rise to 3.0 million tonnes. If this is achieved, it would be down from AWB's target of managing 4.0 million tonnes of a 2008-09 Australian wheat crop of 20 million tonnes.

This implies less than 15 percent of the crop is moving into the pool, which is an issue not only for AWB's pool management business but for the harvest finance business as well, he said.

"Additional comments (by AWB) suggested that the Australian commodity management business isn't generating significant uplift in volumes, suggesting that in total it has lost significant share to new entrants," Snape said.

AWB reported Tuesday operating conditions deteriorated substantially in the four months ended Jan. 31, adding the agribusiness now expects profit in its fiscal first half ending Mar. 31 to be down 45 percent to 55 percent from an actual A$22.3 million in the year-ago period.