April 13, 2010

Australia's wheat exports slow down

Exports of wheat from Australia are at a slightly slower pace than last year as exporters struggle with a strong currency, lower prices and an oversupplied world market.

CBH Group, the country's largest grain exporter, estimated on that about 6.61 million tonnes had been shipped in the October-March period, down from 6.74 million tonnes for the same period last year.

Last month Commonwealth Bank of Australia estimated that 15.7 million tonnes could be exported during the October to September marketing year. But the bank added that its forecast might be optimistic given tough competition in Asian markets.

Traders have also reported tight markets. "There's stiff competition from Europe and Black Sea origins such as Russia coming into Asian markets normally supplied by Australia, as well as from Canada and the US Pacific Northwest," a Melbourne-based trader said.

Australian premium white wheat is selling at around AUD211 (US$196) per tonne free-on-board (FOB), ex-Western Australia, about AUD100 (US$93) per tonne less than a year ago, due to ample world supplies.

A strong Australian dollar also has been blamed for poor competitiveness. The currency is trading around at around 93 US cents, compared with around 70 to 72 US cents a year ago.

"A high Australian dollar and low prices have put a major curb on exports so things are ticking a long quite slowly at the moment," said David Ginns, a spokesman for GrainCorp Ltd , which handles most wheat exported from eastern Australia.

In 2009-10, Australia's wheat production totalled 21.66 million tonnes, up from 20.94 million tonnes in 2008-09 when 13.87 million tonnes were exported.