December 5, 2006

AWB may have less grain to export as farmers delay sales

Australian grain trader, AWB, which has lately been in news for alleged payments made to secure wheat deals in Iraq might have less grain than expected to export this year as farmers delay sales.

About 75 percent of wheat harvested in western Australia was either being warehoused or supplied to rival CBH Group, according to Rhys Ainsworth, manager of corporate affairs for Perth-based CBH.

Australian farmers intend to release their sales to AWB after hearing a government word on whether the company would be stripped of its 67-year-old monopoly. Worsening drought has also been cutting exports.

Growers fear a change in market with a change in the current export arrangements, pointed out Mike Chaseling, executive director of Melbourne-based commodity management company Emerald Group Australia Pty.

Incidentally, AWB used its veto twice to block an application by CBH Group to export more than 2 million tonnes of wheat. CBH has offered to pay farmers A$30 (US$24) more a tonne than AWB.

Wheat price could go up A$20-A$30 (US$15-23) a tonne overnight in the event of any change made to the export licence arrangements, said Richard Koch, managing director of Perth-based analysts ProFarmer.

Since, AWB has already received more than 750,000 tonnes of wheat, changing country's wheat marketing system this harvest could mean a loss of access to countries like Japan and Korea, according to a company statement.