December 8, 2006

Canada to benefit from Australian wheat struggle
 

The Canadian Wheat Board (CWB), the world's biggest seller of wheat and barley, expects exports to rise 19 percent this year because of a larger domestic crop and reduced supply from Australia owing to ongoing drought.

Wheat prices have soared 66 percent in the past year on the CBOT, pushing up costs for companies, as

dry weather cut harvests in Australia and elsewhere.

The reduced Australian crop has created opportunities for the CWB to exploit markets, including in South-east Asia, the Middle East and even Africa, where Australia's AWB was till recently traditionally active, said Ward Weisensel, chief operating officer of the Winnipeg, Canada's Manitoba-based board.

Australia, the world's third biggest exporter after the US and Canada, exported 15.2 million tonnes after the last harvest of 25 million tonnes. Weisensel however, declined to speculate on the possible impact on Australia's exports of this week's decision by Prime Minister John Howard to strip AWB of its 67-year-old monopoly. The move followed an inquiry recommending criminal charges against the company for paying kickbacks to the former Iraqi regime of Saddam Hussein.

As a result of the PM's decision, AWB would no longer be able to veto applications by rivals to export Australian wheat.

The decision might help the CWB and companies, including Cargill, GrainCorp and Glencore International AG, to gain access to Australia's A$3.3-billion (US$2.6 billion) wheat export market.

The CWB however, has been struggling with its federal government to retain monopoly over wheat and barley sales.