Australian wheat exporters strongly compete on demand

 

 

Demand for and competition to export wheat from Australia has increased since export arrangements were liberalized July 1, 2008, Ted Woodley, chairman of regulator Wheat Exports Australia, said Monday (February 23).

 

Responding to questions at a Senate committee hearing, Woodley said 22 companies have been accredited as bulk exporters, including former monopoly operator AWB Ltd. (AWB.AU), and these are competing for wheat with participants in the domestic industry, such as flour millers.

 

Of the accredited companies, 14 have already exported bulk cargoes, a number that will soon rise to 16.

 

As part of the accreditation process, an applicant must submit a proposal to export wheat, and while many of these might be a little optimistic, the sum total of export proposals well exceeds the amount of grain available for export, he said.

 

"That would indicate that the demand for grain exceeds supply," Woodley said.

 

Moreover, some of the accredited exporters are now selling into new markets, while some are replacing wheat that they had previously sought internationally with Australian wheat, he said, without going into details.

 

"Now they are buying some, or in some cases nearly all, of their grain within Australia," he said. "The impression we're getting is that there has been an increase in competition and an increase in demand for Australian wheat."

 

Australia's 2008-09 wheat crop yielded 21.4 million metric tonnes, according to the government's chief commodities forecaster, the Australian Bureau of Agricultural and Resource Economics, or Abare.

 

With an annual domestic market of around 7.0 million tonnes, the balance of production is available for export.

 

National production in the two previous years was reduced by a drought, with the 2007-08 crop producing 13.0 million tons and the 2006-07 crop 10.8 million tonnes, sharply reducing the availability of wheat for export.

 

Wheat Exports Australia Chief Executive Peter Woods told the Senate committee that more than 3.0 million tonnes of wheat has been exported since October, the most aggressive export and shipping program "for a long time."