May 25, 2004

 

 

Australia AWB Lifts Estimated Returns On Benchmark Wheat

 

Australia's monopoly wheat exporter AWB Ltd. late Monday upgraded its estimate of returns from sales of its benchmark wheat type to be grown this crop year ending March 31, 2005.

 

AWB now estimates its benchmark new crop Australian Premium White type wheat of 10% protein will return A$220 a metric ton free on board, exclusive of a 10% goods and services tax.

 

Previously, AWB estimated returns for this grade in a range A$210/ton to A$220/ton.

 

The company did not adjust its estimate of returns from collective sales of old crop benchmark wheat, which remains at A$226/ton, or any other old crop grades.

 

AWB also issued for the first time estimated pool returns for other new crop grades.

 

These estimates generally reflect a more optimistic international wheat market than this time last year, Sarah Scales, AWB's general manager of its national sales pool, said in a statement.

 

This outlook reflects tighter global stocks, potential production problems and signs that there might be an increase in demand, she said.

 

"Progress of the new crop remains a focus of the market, and while the European crops are in excellent shape, there have been some production problems for U.S. and Canadian wheat," she said.

 

A major offsetting influence on the estimates of new crop returns is the Australia dollar, which is trading around US$0.6960 now, significantly higher than a year ago, she said.

 

Scales said estimated price spreads between new crops grades are broadly in line with previous years, though the differential between benchmark milling grades and durum grades has tightened this year.

 

Global stocks of bread wheat are tight, she said, but large crops of durum are anticipated in Europe.

 

Australia's new wheat crop usually is planted in May and June. AWB issues early estimates of new crop returns to inform growers as they make planting decisions.

 

AWB sells wheat collectively on behalf of growers through a pooling system and attempts to estimate average returns from sales spread across the marketing year, which started October 1.

 

It deducts storage, handling, transportation and other costs before passing on returns to growers.

 

The company exports most wheat it receives from growers, making it a major global supplier, and also trades in the domestic market.

 

AWB will next update its estimates of pool returns on June 7.