April 8, 2009

Western Australian-based grain company Cooperative Bulk Handling Ltd. - the nation's biggest wheat exporter - late Tuesday (Apr 7) trimmed its estimated returns on pooled wheat sales from the 2008-09 crop, a move that reflected the impact of a stronger Australian currency.

The estimated return on CBH's Harvest Pool was cut A$6 to A$325/tonne free on board, while its Benchmark Pool fell A$13 to A$320/ton FOB. The Benchmark pool isn't hedged for currency moves while the Harvest Pool is, buffering returns from currency moves, it said.

The Australian dollar has rallied strongly over the past month, rising to US$0.72 on Monday from US$0.68 cents on March 30 and US$0.63 on March 9.

CBH held unchanged estimated pool returns for other grains that it markets that were delivered from the 2008-09 harvest.

There is a large global supply of barley and this, together with weakening livestock demand, is creating a bearish outlook for prices. However, the uncertainty of Argentina's corn supplies will provide some support for feed grains and possibly prevent any market lows, CBH said in a statement.

International rapeseed values have risen after the USDA lowered prospective soy acreage, potentially causing supply and demand to tighten. Threats of a labour strike in Argentina continue to support international values as the decreased supply of soy from that country creates more demand for US soy, again tightening the supply/demand ratio, it said.

The strength in the Australian dollar has offset these moves and kept domestic values relatively stable.

The oats market remains quiet due to the abundance of feed grains available globally. A larger than expected oats crop in Canada continues to see values staying relatively quiet. Market direction in the coming months will depend on how many Canadian farmers reduce their plantings - oats being the worst performing crop on a per hectare basis, CBH said.

Lupin values have continued to strengthen in recent weeks, inline with an increase in other proteins, in particular soymeal which is the major competitor for lupins. Export markets continue to place lupins back into feed formulations with increased demand expected, despite protein quality coming in lower than average this year, CBH said.