September 28, 2010

 

Australian wheat supplies fall due to Russian export ban

Australia's bulk wheat stocks fell 15.4% between July and August as exports picked up in response to Russia's recent ban on grain exports, and stocks are expected to diminish further in a tightening global market.

 

Wheat stored by bulk handlers fell to 6.687 million tonnes at end-August from 7.9 million tonnes at end-July, the Australian Bureau of Statistics (ABS) said.

 

Russia's ban, imposed in early August as severe drought withered its crops, is expected to lead to further falls in stocks in Australia, the world's fourth-largest wheat exporter.

 

"Australian wheat exports have picked up significantly in the last couple of months as a result of an improvement in export opportunities directly linked to the Russian export ban," said Luke Mathews, an agricultural commodities strategist at Commonwealth Bank of Australia (CBA).

 

CBA on Friday (Sep 24) raised its estimate of Australian exports to more than 15 million tonnes for the marketing year to September 30, up from an earlier estimate of just under 14.5 million tonnes.

 

It forecasts that exports could rise to 17 million tonnes in 2010-11, helped by improved demand and higher production.

 

CBA estimates end-September bulk wheat stocks will fall further, to just under 4.5 million tonnes, but will still be higher than the 3.4 million tonnes held at the end of 2008-09.

 

The increase in ending stocks between 2008-09 and 2009-10 reflects better harvests during the past two seasons as production in eastern Australia recovered from drought.

 

Bulk stocks at end-August were almost 50% higher than a year earlier when 4.494 million tonnes were in storage.

 

Australia's current wheat harvest is just getting underway in the central region of the northeastern state of Queensland and will be in full swing by mid-November. CBA expects a national harvest of 23.1 million tonnes, up from a government estimate of 21.7 million tonnes harvested the previous year. The bank's estimate is shy of a record 26.1 million tonnes harvested in 2003-04.

 

Grain growers in eastern Australia this season are expected to reap record crops thanks to well-timed rains during the growing season, offsetting lower output in Western Australia, where production has been hurt by a prolonged dry period.