October 12, 2011
Australian wheat supply expected to hit record
Australia's wheat forecast advance to 25.5 million tonnes from 1.7 tonnes, and was rated by the Commonwealth Bank of Australia as the country's third biggest.
Hopes rose for Australia's winter crops even as combines began rolling, with a second successive bumper harvest to leave the country with its highest wheat stocks ever.
CBA's fresh estimate still represents a drop of 1.1 million tonnes on last year's harvest, and short of the official estimate of 26.2 million tonnes, over which the bank has been sceptical, deeming it "simply too high".
However, it follows conditions which CBA analyst Luke Mathews said had shown "sharp improvement" in the east coast, and continued to prove favourable in Western Australia, the top grain-producing state.
"Following difficult growing conditions from June to mid September, east coast grain and oilseed crops received yield-saving rains in the final 10 days of the month," Mathews said.
The comments came hours after CBH Group, which handles the great bulk of the Western Australia's crops, upgraded to 12.5 million tonnes its estimate for the state's total grains output, including canola, for which harvest is now underway.
And this estimate, in line with Abares', was a "conservative" forecast, with a 13 million tonne harvest on the cards if conditions prove favourable.
"Now we need it dry, there is the potential for more rain, or frost. We like to be a little bit conservative until we see what we end up with in the bin." a CBH spokesperson told.
While CBH declined to break down the harvest in detail, it reckons on about 70-75% of tonnage, equivalent to roughly nine million tonnes, coming in as wheat with up to 20%, or 2.5 million tonnes, as canola.
Coupled with hefty stocks left over from last year's record harvest, Australia's bumper crop will leave it with record supplies of 33.3 million tonnes in 2011-12, Mathews said.
"This will underpin Australia's 2011-12 wheat export programme, which we believe could slightly exceed our forecast 19 million tonne programme in 2010-11," he said.
Abares as pegged, wheat shipments from Australia, the southern hemisphere's top exporter, at 18.7 million tonnes in 2010-11 and 20.5 million tonnes in the new season.
The prospect of hefty crops also looks likely to weigh on futures prices, including feed barley, besides weakening further the premium of Western Australian milling wheat over east coast supplies.
Western Australia milling wheat for January delivery closed down 3.3% at AUD233 (US$231) a tonne on Tuesday (Oct 11).
New South Wales milling wheat for January ended down 2.1% at AUD228 (US$226) a tonne, touching a contract low of AUD227 (US$225.07) a tonne earlier.