July 7, 2010
Australian wheat exports rise 27%
Wheat exports jumped 27% in May but the increase may be difficult to sustain amid stiff global competition among producers.
High local prices, ample global stocks and a sizeable coming harvest also point to a tight market.
"Export competition is still going to remain fierce," commodity strategist with Commonwealth Bank of Australia (CBA) Luke Mathews said. "We are expecting a significant build in Australian wheat stocks going into the start of the 2010 harvest."
The Australian Bureau of Statistics (ABS) today (July 7) reported that Australian wheat exports rose substantially in May to 1.4 million tonnes, from 1.1 million tonnes in April. On a 12-month comparison, wheat exports grew by 3.7%.
Australia is a major supplier to the global wheat trade, with stocks peaking around the end of the harvest in December or January, then declining steadily through the year.
Rabobank Australia said on Monday (July 5) that it expected exports to rise in May and June as a weaker domestic currency made Australian grain more competitive in international markets.
CBA's Mathews said exports in May took shipments to 9.1 million tonnes for the marketing year beginning October 1, 2009, representing a fall of 5% from 9.6 million tonnes in the same period a year earlier.
Mathews also attributed the rise in May exports to currency movements. However, even with a softer currency than in April, wheat for delivery in the near future was still highly priced when compared to grain from other countries, and this could continue to constrain Australian wheat-export volumes after May.
International wheat prices have rallied in the past week and this has carried over into the local market, but the weight of ample global supplies, which will remain at high levels for at least six months given the anticipated global harvest, could have a dampening effect, Mathews said.
The results of current global buy-tenders out of Iraq and Egypt were likely to set the scene for prices in coming months, he said.
ABS also reported that domestic monthly consumption of wheat rose by 10,000 tonnes in May to 482,000 tonnes, which was 60% higher than in May 2009.
Total wheat stored by bulk grain handlers, growers and users as of May 31 was 13 million tonnes, down 13% from the end of April but well up from the 9.2 million tonnes stored at the end of May 2009, the ABS reported in its monthly Wheat Use and Stocks publication.
Of the wheat stored as of May 31, bulk handlers held 11.2 million tonnes and grain growers and users held 1.8 million tonnes, ABS said.
Wheat committed for export at May 31 totalled four million tonnes, up 13% on year with all states reporting an increase in export commitments from April 2010. Wheat stored for domestic use totalled 1.1 million tonnes, up 27% on year.
