October 16, 2007

 

Australian cattle feeders could import grain early 2008 

 

 

Australia's drought-hit wheat crop could yield less than the 12 million tonnes many expect, potentially fueling grain imports by early in 2008, Jim Scudmore, vice president of the Australian Lot Feeders Association, said Tuesday (October 16, 2007).

 

"We can probably be looking at importing grain early next year, even if it's just to supply the eastern seaboard to take the pressure off the upcountry stocks," he told Dow Jones Newswires by telephone.

 

Scudmore, general manager of Kerwee Group, which operates a 10,000-beast cattle feedlot on Queensland's Darling Downs, also said national wheat production could undershoot current expectations.

 

About three weeks ago crops in this area, potentially one of Australia's best cropping districts, were looking the best for eight years, he said.

 

But a run of hot weather about two weeks ago, then widespread hail and storm damage a week ago, destroyed 30 percent of the crop in some areas.

 

Scudmore thinks it is unlikely the damage to crops in Queensland would have been factored in by analysts.

 

"When the numbers are crunched, 12 million (tonnes) will even be looking a bit shaky," he said.

 

This means that potentially, there will be shortages of grain for livestock feed, though this will in part be sorted out by normal market forces, he said.

 

The number of cattle in feedlots slumped 22 percent on quarter and 23 percent on -year to 680,519 in the third quarter, according to a quarterly survey issued Monday by ALFA and marketing concern Meat & Livestock Australia Ltd.

 

Demand for grain from the sector could fall a further 15 percent this calendar quarter, and that reduction in demand will take some pressure off supply, Scudmore said.

 

The industry plans to query the government about its issuing of an export permit for new crop wheat.

 

"We'd be trying to put as much pressure as we can on government saying, 'Hang about. Why do you want to export if we look like importing it as well?'" he said.

 

"We run the real risk for the first time in probably 30 to 50 years of actually running out of grain," he said.

 

Majority exporter AWB Ltd. (AWB.AU) has the freedom to export as much wheat as it wants.

 

Agriculture Minister Peter McGauran has already granted Cooperative Bulk Handling Ltd. a permit to export 500,000 tonnes from the new crop, while other applications for export permits have been shelved for now pending greater knowledge of the size of the new crop.

 

Industry expectations are focussed on wheat output of around 12 million tonnes from a harvest to be completed by year end, which would be up from an actual 10 million tonnes in 2006, but much lower than the 25 million tonnes harvested in 2005.

 

After annual domestic demand of about 7 million tonnes is met, the remainder of production is available for export, usually making Australia a major global supplier.