March 13, 2007

 

Australia AWB cuts estimated returns on wheat exports
 

 

Australian wheat exporter AWB Ltd. Tuesday cut its estimate of gross returns from pooled export sales for all grades of new crop wheat, except durum, by A$4.50/tonne (about US$3.52/tonne).

 

As a result, benchmark Australian Premium White grade of 10.5 percent protein grown this crop year ending Mar 31 is now estimated to return a gross A$237.50/tonne, FOB, the first change in the estimate from Dec 11.

 

Australian Prime Hard grade of 13 percent protein was cut to A$253.00/tonne, while Feed grade fell to A$200.50/tonne. Australian Premium Durum grade of 13 percent protein was held unchanged at A$261.00/tonne.

 

David Johnston, acting general manager of AWB's collective export sales pool, attributed the downgrade in estimated returns to lower quality wheat than expected in the pool after a drought and weaker US wheat futures in the past two weeks.

 

"With overall lower-quality wheat in the national pool, the financial returns we can achieve from physical sales in the international market will obviously be reduced," Johnston said in a statement.

 

The granting of bulk wheat export permits to two other exporters for 800,000 tonnes and high domestic wheat prices on Australia's east coast resulted in "significant tonnages of high-quality wheat being diverted from the national pool," he added.

 

The 2006-07 national pool operated by AWB received 3.1 million tonnes of wheat from the harvest completed in December, down from original expectations of 4.0 million tonnes, he said.

 

AWB also lifted its estimate of returns from sales from the number one 2005-06 pool for benchmark Australian Premium White grade by A$1/tonne to A$192/tonne. Estimates for most other grades in the 2005-06 pool were lifted by A$1/tonne or A$2/tonne, it said.

 

AWB pools returns from its export wheat sales and deducts costs before paying producers. Sales from a pool can continue for up to 18 months after harvest, depending on production and demand.

 

Johnston said the 2005-06 pool would be extended into 2007 to enable AWB to manage supply, given the limited amount of low-protein wheat and Australian Hard grade available for key markets.

 

AWB plans to distribute A$450 million to A$500 million from the 2005-06 pool in April, with a further payment expected in June, he said.

 

The next pool estimate update is scheduled for Mar 26.