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November 14, 2008

 

Australia's CBH in near desperate bind with wheat shipping

 

 

Western Australian grain company Cooperative Bulk Handling Ltd. faces a near desperate situation with a veritable convoy of ships steaming towards the state but little if any grain available to export as growers warehouse crops from a rain-delayed harvest to consider marketing options.

 

CBH potentially faces incurring crippling demurrage costs that could run to in excess of US$30,000 a vessel a day and a storage and handling system that could clog up, forcing the harvest to grind to a halt.

 

The company reported Thursday that is has received around one million metric tonnes of grain into its system, little more than 10 percent of what it expects from the harvest, which will accelerate in coming days and weeks before finishing around year end in the state's south.

 

CBH marketing units scheduled a vessel arrival Tuesday at northern Geraldton Port, and others are scheduled to arrive Friday, Saturday, Tuesday, Nov. 22 and Nov. 27, according to the company's Web site. A busy near-term vessel arrival schedule has also been posted for the Kwinana export port south of Perth.

 

Tim Collins, a CBH operations and logistics manager, Friday issued an urgent plea to growers to make a decision about allocating their wheat to a buyer or pool operator.

 

"It isn't a situation that's desperately bad today but we can see that probably within about two weeks there will be a significant impact on the harvest in the Geraldton area unless growers begin to nominate their grain," he said in an interview on Australian Broadcasting Corp. radio in country Western Australia.

 

"We feel the pressure most acute in Geraldton at the moment and that's why we're very keen for Geraldton growers to focus on the issue right now," he said.

 

Collins said the vessels waiting off port will incur demurrage, while CBH's storage and handling system will begin to clog up with what is a larger-than-average harvest this year.

 

"It really is a today issue that will become more and more serious as the days over the next week or so begin to...unfold," Collins said.

 

The wheat harvest is the first since World War II to operate with deregulated export arrangements, with 19 accredited exporters replacing the former monopoly system operated by AWB Ltd.

 

Collins said that in the regulated environment in the past, the issues of marketing, storage, transport and shipping were relatively simple because growers tended to nominate their grain to AWB or a CBH unit and the export system was kept open and moving.

 

This year, CBH didn't plan on the large amount of warehousing of the new crop that is taking place, a trend compounded by the rain-delayed harvest, he said.

 

CBH wasn't immediately returning telephone calls.

 

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