October 26, 2006

 

Australia's ABB Grain eyes wheat export programme

 

 

Despite a drought, Australia would have an exportable surplus of new crop wheat and combined with old crop inventories would run a sizable export programme, Peter Jones, general manager trading at ABB Grain Ltd. (ABB.AU), said Thursday.

With the harvest gathering pace across northern wheat lands and with yields exceeding expectations in some areas, the domestic market is already starting to realise the crop might not be as dire as earlier forecast, he said.

 

Indeed, the domestic cash market has fallen about AUS$30 a tonne across the board over the past week or so, he said, with Australian Standard White milling grade quoted Thursday in The Land newspaper around AUS$300/tonne.

 

ABB Grain forecasts new crop wheat production in a range 9 million to 11 million tonnes, the same range to which major wheat exporter AWB Ltd downgraded Wednesday, compared with an actual 25 million tonnes last crop year ended Mar 31, 2006.

 

"The crop this year would still generate an exportable surplus and, coupled with a significant carry in from last year's near record crop, a sizable export programme would result," Jones said in a statement.

 

With ongoing annual domestic demand of about 5.5 million tonnes, export availability would tighten sharply.

 

Many industry participants believe more than 6 million tonnes of wheat was carried over from last harvest, Jones said.

 

"As a result, the domestic market would have ample supplies of grain," he said.

 

Earlier in October, AWB said it expects to carryover old crop inventories of 3 million to 4 million tonnes into its new shipping year starting Dec. 1, about the same level as last year.

 

AWB is the dominant holder of old crop wheat, but not the only one. Official figures are not kept.

 

Jones said a further indicator of the return to "normality in the Australian market" was a marked decrease in the amount of wheat sought at AWB's weekly tender, he said.

 

In the past month, the market saw "a remarkable 76 percent fall" in the tonnage sought at the tender, resulting in just 74,000 tonnes flowing back to the domestic market in this week's tender, he said.

 

Meanwhile, a spokeswoman for Department of Agriculture said the government's Australian Quarantine & Inspection Service, or AQIS, has "received a number of applications from a variety of companies from a number of sources."

 

AQIS has referred these applications for risk assessment to Biosecurity Australia but no import permits have been issued thus far, a situation unchanged from several weeks ago, she said.

 

About 500,000 tonnes of feedgrain were imported in 2002-03, namely maize from the US and wheat from Britain, but imports stopped in 2003 when drought-breaking rains fell, and have not occurred since.