February 15, 2008

Australia gears up to sow record wheat on attractive global prices

Australia, the world's sixth largest wheat exporter, is poised to plant its record volume of wheat as high prices and improved conditions lure farmers.

Mike Chaseling, from Emerald Group Australia, a Melbourne-based commodity management and grain trading company, said they are going to be fence-to-fence given the favourable climate.

In the past year, wheat prices more than doubled to a record US$11.53 a bushel this month, as demand outpaces production and global inventories head for a 30-year low.

Australia will plant its next crop around May for harvest starting on October.

Wheat for July delivery jumped as much as 37.75 cents, or 4.2 percent, to US$9.5 per bushel on the Chicago Board of Trade (CBOT) in after-hours electronic trading today, and was at US$9.255 at 4:17 p.m. in Sydney.

Prices soared following Australia's worst drought on record cut output the past two years, and production dipped in Canada and the US.

Prior to the drought, Australia was rivaling Canada as the world's second- largest shipper of wheat. The country sowed a record 13.4 million hectares to wheat in 2004-05, to produce a crop of 21.9 million tonnes.

In 2004, Australia produced its biggest harvest of 26.1 million tonnes from plantings of 13.1 million hectares, the Australian Bureau of Agricultural and Resource Economics said.

The US is forecast as the world's largest wheat exporter, followed by Canada, Russia, Argentina, Kazakhstan and Australia, in 2007-2008, according to the USDA.