February 27, 2006

 

Australia AWB cuts estimated returns on benchmark wheat
 

 

Australia's monopoly wheat exporter AWB Ltd. Monday cut its estimate of returns from sales of its benchmark wheat type grown this crop year ending Mar 31, 2006, citing weaker global prices for hard wheat.

 

As a result, AWB estimates its benchmark new crop Australian Premium White type wheat of 10 percent protein will return a gross A$189 (US$139.6) a tonne (FOB), down A$3 (US$2.2) from the previous estimate two weeks ago.

 

Estimates for most other grades of wheat were cut by the same amount.

 

AWB's new crop Australian Prime Hard grade of 13 percent protein is estimated to return A$226.50 (US$167.27) a tonne, down A$3.00 (US$2.2) a tonne . However, the estimated return for Australian premium Durum was held unchanged at A$235.50 (US$173.9) a tonne.

 

David Johnson, manager of AWB's national sales pool, said that while US wheat futures rallied in the past two weeks, the impact of this was offset by weaker world prices for hard wheat.

 

"The US futures market is currently not reflective of the physical wheat market," he said in a statement.

 

"Future prices for delivery at the end of this season have moved higher in the past two weeks due to weather concerns in the US southern wheat belt and considerable fund activity," he said.

 

AWB made no change to its estimated pool returns for wheat grown next crop year, with the benchmark grade still listed in a range A$195-A$205 (US$144 -- US$151.4) a tonne.

 

AWB sells wheat collectively on behalf of growers through a pooling system and attempts to estimate average returns from sales of all the wheat, which can take 18 months or more from harvest.

 

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

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

 

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