August 6, 2007

 

AWB issues record estimated return on benchmark wheat
 

 

Australian wheat exporter AWB Ltd. Monday (Aug 6) issued record estimates for pool returns for various grades of the crop to be harvested late-2007, reflecting a strong global market.

 

The estimated gross return on new crop benchmark Australian Premium White grade of 10.5 percent protein was put at A$270/tonne, FOB, up from a previously advised range of A$255-265/tonne and up from the estimated return from the 2006/07 crop of A$234.50/tonne.

The estimated gross return for new crop Australian Premium Durum grade was put at A$340/tonne, up from the previously advised range of A$320-330/tonne, FOB, and up from the 2006/07 estimate of A$258/tonne.

 

New crop Australian Prime Hard grade of 13 percent protein is estimated to return A$284/tonne, FOB, up from A$250/tonne for the 2006/07 crop, while new crop feed grade is estimated to return A$190/tonne, down from the estimate for 2006/07 of A$197.50/tonne.

 

All estimates of returns from the old crops were held unchanged.

 

David Johnston, general manager of AWB's pooled wheat sales programme, said the high estimated returns for new crop grades reflect a current global shortage of wheat that would continue until southern hemisphere crops start to be harvested in November and December.

 

"The world wheat market is being led by European quality and yield issues, former Soviet Union production concerns and decreased production in Canada," he said in a statement.

 

"In addition, world wheat stocks are historically tight and likely to remain so well into 2008, with US stocks the tightest in 10 years," he said.

 

The estimate of returns for benchmark new crop wheat also reflects strong international demand for quality wheat. Due to high world values, protein spreads are historically narrow, notwithstanding a smaller Canadian crop and quality issues with US hard red winter wheat and European crops, he added.

 

AWB, the majority exporter from Australia, pools returns from its export wheat sales and deducts costs before paying producers. Sales from a pool can continue for more than 18 months after harvest, depending on production and demand.

 

The next pool estimate update is scheduled for Aug 20.