September 8, 2010

Australian wheat gets double boost

Australia's wheat trade prospects are benefiting from concerns over both quality and quantity of crops elsewhere, AWB said, as official data revealed a jump in the country's exports.

The grain handler revealed very strong interest for Australian wheat, both to make up for volumes lost through weaker crops in the EU and the former Soviet Union and to supply higher quality needs. Exports from the drought-hit Black Sea states would prove very limited, according to AWB.

The comments came as analyst UkrAgroConsult cut by 3.1 million tonnes to 16.7 million tonnes its forecast for Ukraine's grain exports in 2010-11, with the estimate for wheat cut by 1.1 million tonnes to just under 6 million tonnes.

The Kiev-based consultancy blamed weaker hopes for Ukraine's crop which, for total grains, it has pegged at 40.4 million tonnes, down some 12% year on year.

However, within the EU, crop hopes have improved in recent days, with both French and German governments issuing relatively upbeat harvest forecasts, and the quality of the UK crop also being viewed with greater optimism by traders.

Indeed, weaker expectations of levels of downgrade of food wheat to feed quality have allowed London feed wheat-until Tuesday-to close its discount to Paris milling wheat.

London's November lot retreated 1.4% from Monday's two-year closing high to finish at GBP162.80 a tonne, amid a wave of profit-taking on grains markets, with Paris's November lot ending 0.9% lower at EUR229.15 a tonne.

Analysts said that the promising prospects for the Australian crop, for which early harvesting has just started in central Queensland, was allowing physical wheat prices to outperform the strong international market.

Production prospects had been further improved by recent rains, said AWB, whose stronghold is in eastern Australia, rather than Western Australia, where dry weather is still a concern.

Earlier Australia's official crop bureau, Abare, reported a 52% jump, year on year, to 1.59 million tonnes in the country's wheat exports in July, when the concerns over Russia's drought began to bite in earnest.