July 25, 2012

Eastern, South Australian wheat exports set to fall

Australia and New Zealand Banking Group (ANZ.AU) reported Tuesday (July24) that ports in Australia's eastern states and from South Australia, record year-to-date wheat exports have set the scene for a large drawdown in stocks.

Wheat stocks in these regions will fall below five million tonnes by the end of the marketing year on September 30, a 3.5-million-tonne decline on year, it said.

"This, coupled with our current Australian wheat production forecast of 24 million tonnes, is likely to see a marked reduction in supply available for export," the bank said in a statement.

Combining Queensland, New South Wales, Victoria and South Australia, the forecast exportable surplus for next marketing year is 12 million tonnes, a one-third decline from this marketing year, it said.

ANZ's assessment comes as global grain and oilseed markets assess the condition of deteriorating crops due to drought in the US Midwest, reduced production prospects in the Black Sea region and China and crop quality concerns in France. Global prices have rallied sharply in the past six weeks, though they fell back on Monday (July 23).

Countries such as South Korea, the Philippines, Thailand and Vietnam that have shown a marked increase in wheat shipments from Australia's east coast ports over the last two seasons will have to at least in part switch back to higher-priced corn and/or better milling grade wheat next marketing year, ANZ said.