May 17, 2011

 

Australian 2010/11 wheat exports to hit seven-year high

 

 

Australian wheat exports are on track to reach a seven-year high in 2010/11, aided by Asia's strong feed wheat demand where the grain is being used as a substitute to high-priced US corn in some cases, analysts and traders said Monday (May 16).

 

Wheat exports could be around 18 million tonnes for the marketing year ended September, 2011, according to Australian Crop Forecasters' (ACF) analyst Gavin Warburton.

 

Australia is benefiting from being an alternative supplier to Black Sea region suppliers such as Russia and Ukraine. Russia banned exports last year after a severe drought hit the region while the Ukraine imposed export quotas.

 

ACF estimates shipments could hit a new seven-year high, surpassing exports of 17.87 million tonnes in 2003/04 and 2009/10 exports of 14.66 million tonnes, according to Australia's statistics bureau.

 

The strong export pace follows a record harvest in 2010/11 of 26.32 million tonnes, although around half was downgraded to feed or general purpose quality due to a wet eastern states harvest.

 

"There's a lot of feed wheat going out...obviously with a tight corn situation in the United States, and high feed grain availability here, there's strong demand for feed grain into South-East Asia," said Warburton.

 

ACF estimates that exports from October to the end of May could reach 12.11 million tonnes, up nearly one-third for the same period of the previous marketing year. The firm bases its estimates from ship loading bookings at Australian grain ports.

 

Milling wheat shipments from South Australian and Western Australian ports have also been brisk, according to Chris Kochanski, a senior grain trader at Emerald Group.

 

"Milling wheat exports have been predominantly into Asia and some big volumes into the Middle East, including Iraq," said Kochanski.

 

Last week, government agency Wheat Exports Australia (WEA), which oversees bulk wheat exports, said exports to the Middle East almost doubled in the six months to March.

 

Milling wheat shipments to Iraq increased to 454,000 tonnes, nine times the amount for the same period last year, according to WEA.

 

Kochanski said east coast ports were also busy, shipping largely feed quality or general purpose (GP) wheat to markets such as Vietnam and Bangladesh.

 

"I would say probably two-thirds of east coast exports would be feed wheat and low falling number GP wheat," said Kochanski. The falling number measures quality with a low number indicating lower quality.

 

Despite the strong pace, Kochanski said feed wheat exports out of the east coast were being hampered by a lack of rail capacity, making it difficult to get grain from up-country to export terminals.

 

"If we had a similar supply chain to the west coast where it is quite easy to get wheat to port then I would imagine we would have done at least 25% more feed wheat exports out of the east," said Kochanski.