AWB hikes wheat price hopes amid Russian drought

AWB, hiking its wheat price hopes, trumpeted the boost that Russia will hand Australia's exports, even as Moscow merchants stood by a forecast of steady shipments.

AWB, the Australia grain handler, lifted by up to 17% forecasts for returns from its wheat pools, the second upgrade in a month.

The revisions, which put many growers on course to receive more than A$300 a tonne, reflected the "opportunities" for Australian wheat exports, with drought threatening to cut Russia's grain production by more than 20%, and Kazakhstan's by even more, while wet weather has plagued Ukraine's crops.

Dry weather has also affected output in the EU, the world's biggest wheat grower, with concerns now centring on Germany, the region's second-ranked producer.

The forecast follows an upgrade earlier this month by the USDA to its forecasts for Australia's wheat exports by 1 million tonnes to 15.5 million tonnes in 2010-11, the best for five years.

The USDA reduced its forecast of Russia's wheat shipments by 2.5 million tonnes to 15.0 million tonnes, signalling a looser grip on global trade of a country whose competitively-priced shipments have played a big role in capping prices worldwide.

However, Arkady Zlochevsky, president of industry lobby group the Russian Grain Union, said that Russia may still be able to export 20 million tonnes of grain in 2010-11, despite cutting its forecast for the harvest from 85 million tonnes to 81.5 million tonnes.

This estimate is lower than the government's current 85-million-tonne figure, but above the estimate of "below 75 million tonnes" from SovEcon, the analysis group whose warnings late last month first rang global alarm bells over the harvest.

Russia, which last year harvested 97 million tonnes of grain, is forecast to face further heat, with a "new heatwave schedule for the next 10 days, according to Paris and Kiev-based analysis group Agritel.