October 26, 2006

 

AWB vows to keep monopoly on exports

 

 

Australian wheat exporter AWB hinted Wednesday (Oct 25) that it would do everything possible to prevent a rival bid from CBH to export wheat from Western Australia.

 

This was despite the fact that CBH seems willing to offer US$30 a tonne more than AWB.

 

AWB International chairman Ian Donges said the proposal by CBH to export two million tonnes would draw big volumes from its national pool, already weakened by the severe drought in the country.

 

CBH's move is a threat to the company's current systems, long-term contracts and forecast returns and AWB has to be mindful of its responsibility to protect the national pool, Donges said.

 

The current conundrum has caused dissension at the highest levels.

 

CBH's bid has the support of Federal Treasurer Peter Costello, who said farmers wishing to avoid selling wheat to the scandal-hit AWB should be able to do so.

 

However, Acting Prime Minister Mark Vaile stopped short of asking AWB to waive its veto to let Western Australia producers sell their grain to CBH. Still, he noted that if AWB wished to remain competitive in the market, it would have to move its prices up further.

 

CBH said it expected to return US$265 to US$275 a tonne to WA farmers if its application was successful. AWB's current estimated pool return is US $245, a lower and more inflexible offer as it has been saddled with high fixed fees and needs to cover losses on hedging positions taken as wheat prices soared

 

The WA Farmers Federation, which has long supported the single-desk, said yesterday growers should not risk the system for a few extra dollars.

 

Despite the warning, CBH chief executive Imre Mencshelyi said the co-operative had been swamped by enquiries from growers who wanted an alternative to AWB.