December 2, 2010

Australian wheat prices jump as rains spoil crop
 
 

Australian wheat prices increased more than 7% as concerns grew about the prospects for the 2010-11 harvest after heavy rain took place in eastern Australia.

"The market is rapidly adjusting prices to the weather outlook. There are forecasts for extraordinary rains over the next two weeks," said an analyst.

"There is simply concern about the availability of high protein wheat," he added.

The development of the harvest progress has been postponed by up to five weeks and the continuing wet weather, attributed by a La Nina weather event. It is expected to see large tonnages of the crop downgraded to feed quality due to sprouting and other quality issues.

Australian milling wheat futures for January delivery rose 7.2% to AUD306.70 (US$296.89) per tonne. It is the highest level in more than two years.

Australia had been expected to harvest a bumper crop after good rains during the growing season but the wet weather has persisted into the harvest time.

Australia is one of the world's leading suppliers of top-end high protein wheat and provides wheat for countries such as Japan where high protein wheat is used to make noodles.

"We have seen a global reduction in milling wheat supplies in the past three weeks because of these east coast rains," an analyst.