April 15, 2008
Australia AWB cuts estimated returns on 2007 export wheat pool
Australian wheat exporter AWB Ltd. (AWB.AU) Monday again cut its estimate of pool returns on collective export sales from the 2007 crop, extending a decline over the past month.
David Johnson, general manager of AWB's pools, said that in the past two weeks, consumers have significantly pulled back on the prices they were prepared to pay for wheat.
Sellers went along with lower prices for their own reasons.
Traders and other suppliers are pricing with a view to secure business and clear stocks in preparation for a large harvest starting in July, Johnson said in a statement.
Similarly, demand has slowed as mills have reduced consumption, looking to participate in more plentiful offers coinciding with the northern hemisphere harvest, he added.
New cash crop bids have moved lower following rain in dry areas of the US winter wheat belt and forecasts of increased world production this year, he said.
Johnson said sales from the 2007 pool are well advanced, but this combination of new and old crop price factors influences estimated returns.
As a result, AWB cut its estimated gross return on its number 1 pool for 2007 benchmark Australian Premium White grade of 10.5 percent protein by AUD8 per tonne to AUD426 per tonne, FOB, Australian Prime Hard grade of 13 percent protein was cut AUD8 to AUD441 per tonne and Australian Premium Durum was cut AUD8 to AUD587 per tonne. Feed grade was held unchanged at AUD350 per tonne.
Despite the falls in estimated returns on 2007 crop benchmark wheat from AUD444 per tonne on March 17, the price remains well above a mid-November level of AUD385 per tonne.
AWB, the majority exporter from Australia, pools returns from its collective export wheat sales and deducts costs before paying growers. Sales from a pool can continue for more than 18 months after harvest, depending on production and demand.
The next pool estimate update is scheduled for April 28.
US$1 = AUD1.07 as of April 15, 2008
