July 23, 2010

Australia increases wheat exports amid increase in global prices

A 37% rise in global wheat prices since early June has boosted sales by Australia, the world's fourth-biggest exporter.

"A slight dip in the dollar, plus the combination of that rise, has provided us with some good selling opportunities," CBH Group Chief Executive Officer Andrew Crane said. CBH is the country's largest grain shipper.

Wheat soared as a lack of rain in Russia, Kazakhstan and the EU and floods in Canada hurt crops. Price gains may be sustained because of the weather and tight supplies of corn, said Matthew Rutter, head of trading at CBH Grain, part of CBH Group. Wheat competes with corn for use in livestock feed.

"Without at least record yields, the corn situation is still tight and that's going to pull wheat along," Rutter said. "We are coming out of a relatively burdensome supply of wheat, so things need to turn quite significantly to really drive prices higher," he said.

Indonesia, Vietnam, Japan and China are so far the largest buyers of Australian wheat for the year to September 30, according to the Australian Bureau of Statistics based on data to May 31.

The wheat surge had spurred grower sales before the next harvest and CBH was hedging new-crop supplies in Chicago, said Rutter. Harvesting lasts from October through January.