August 11, 2005

Global wheat prices face downward pressure

According to Australia's monopoly wheat exporter AWB Ltd., increased wheat exports from the Black Sea region and cheaper ocean freight rates, are adding downward pressure to global wheat prices from a softening US market.

AWB said wheat exports from countries such as Ukraine were being put on the global market at prices far lower than prevailing US values, due to higher new crop production. This put greater weight on international prices.

Ocean freight rates have also fallen as seen for a Panamax vessel, registering a recent rate of US$10,000, a 75 percent plunge from US$40,000 in March this year, AWB said. The fall was seen mainly as the result of lower coal and iron ore demand, as well as greater availability of freight capacity from decreasing port congestions.

AWB forecasts Australia's new wheat crop to be harvested in November and December this year between 21 million tonnes and 23 million tonnes, up from actual production of 20.4 million tonnes the previous crop year ending March 31, 2005.