March 13, 2009

Wheat growers in the Central West area of Australia's New South Wales state continue to withhold some of their recently harvested grain from the market, Justin Schofield of Australian Grain Accumulation Services Pty Ltd. reported Thursday (March 12).

Most growers in the region have sold 50 percent to 75 percent of their crop, which leaves reasonably sized parcels of grain either on farm or in local depots, he said in a comment in The Land weekly newspaper.

Australia produced 21.4 million tonnes of wheat in a harvest concluded in January, with New South Wales accounting for almost one-third of national output. After annual domestic demand of almost 7 million tonnes is met, the balance of wheat produced is available for export, making Australia a major supplier to the global trade.

Historically, warehoused grain would be 95 percent sold by early January, which used to coincide with the access expiry dates for collective sales pools, Schofield said.

"However, pools have had a significant decline in market share compared to previous surplus production seasons," he said.

The current high level of warehousing comes as "strong demand for bulk wheat export" continues to result in late deliveries into the bulk handling system, with more wheat received than out loaded across the Central West in February, he said.

Bulk export freight rates have fallen by 80 percent from a recent peak, which has also increased demand for bulk exports, while container markets are also picking up pace as they are close to parity with bulk markets, he said.

Australian Grain Accumulation Services Pty Ltd. is a joint venture between GrainCorp Ltd. and Cargill Australia Ltd. established in 2003 to manage their grain and oilseed accumulation.

GrainCorp operates Eastern Australia's largest network of upcountry grain storage sites and a string of coastal export terminals.