june 2, 2008

 

Australia's AWB cuts estimated return on 2008 export wheat pool

 

 

Australian wheat exporter AWB Ltd. (AWB.AU) Monday (June 2, 2008) again cut its estimate of returns from its sales pool this year, citing a likely increase in output from major growers including the US, and softer global cash prices.

 

The estimated gross pool return on 2008 benchmark Australian Premium White grade of 10.5 percent protein is now in a range of AUS$340 a tonne to AUS$360/tonne, FOB, down AUS$10/tonne from the previous estimate.

 

AWB issued its first estimate for returns from the 2008 crop on April 1, when it projected a range of A$400/tonne to A$$420/tonne. It has fallen steadily since.

 

David Johnson, general manager of AWB's pools, said northern hemisphere winter wheat crops in major exporting nations are generally in good to excellent condition, especially in Europe, Russia and Ukraine, with the potential for yield forecasts to rise.

 

Winter wheat crops in the US are in good condition with potential for improved tonnage, he said.

 

Spring wheat crops in the US and Canada are nearing 100 percent planted into a less-than-optimal soil moisture profile "although plenty of time remains for good crops to eventuate," he said in a statement.

 

"However, the market is keeping a close eye on moisture conditions in Australia and potential import demand from Pakistan and Middle Eastern countries, where local production this season has been poor," he said in a statement.

 

The continued rise in the Australian dollar to a 24-year high is having a negative effect on commodity prices domestically, he added.

 

The estimated pool return is not currently supported by a hedging programme and will continue to fluctuate by price movements in global markets, he said.

 

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.