April 2, 2008

AWB estimates 2008 wheat returns in AUD400-420 per tonne range

Australian agribusiness AWB Ltd. said Tuesday that gross returns on pooled wheat sales would be between AUD400 to AUD420 (US$364 - US$382) a tonne, free on board, which reflects current global prices.

Mitch Morison, general manager of AWB's Australian commodity management division, said as Australian wheat growers will appreciate, grain markets globally have been extremely volatile for the last 12 months, a trend which will continue.

As the pool estimate is un-hedged, the outcome of Northern Hemisphere wheat production over the next six months will have a major bearing on the direction of world values and estimated returns for AWB's pools, Morrison said.

AWB's price estimate compared with Australia's most active wheat futures contract, ASX January 2009, which closed at AUD384/tonne (US$349), was down AUD12 (US$11) on the day.

Luke Chandler, a senior commodity analyst at Rabobank Australia Ltd., said the fall in ASX wheat futures was a flow through after a sharp downturn Monday in US wheat futures.

Morison said AWB pools will remain a key component of services offered to growers in the next harvest after new wheat export arrangements.

Key elements of AWB's pools will remain, such as the trust structure that protects participants, harvest finance loans and payments, regular pool distributions and payment incentives for grain quality, he said.

AWB will provide opportunities for pool participants to contract into its pools and begin its hedge program once legislative certainty has been provided to the industry, Morrison added.