December 8, 2010

Half of East Australia's wheat output may be feed grade

Eastern Australia is harvesting a bumper wheat crop, but between 50%-60% of the grain may be classified as feed grade and some million tonnes may not be reaped at all, a senior industry executive said Tuesday (Dec 7).

Tom Puddy, head of marketing with co-operative CBH Grain, told Dow Jones Newswires that Eastern Australia's production, excluding Southern Australia, is likely around 16-18 million tonnes, of which at least eight million tonnes will be of feed grade, including 2-3 million tonnes of badly-damaged grain that may be totally abandoned.

"There is a potential abandonment on the cards," Puddy.

If true, this will remove a sizeable chunk of Australia's bumper harvest.

Australia's government Tuesday (Dec 7) raised its wheat production estimate 6.8% from September to a record 26.8 million tonnes, although Puddy said the government's estimate is on the higher side and actual production may turn out to be close to 23.5 million-25.5 million tonnes.

Puddy said usually most Australian wheat is of milling grade but this year, for the first time in at least a decade, a substantial portion is available for export to feed-makers.

Puddy said some sales of Australian feed wheat have recently been made to the Philippines, and said Australian feed wheat is currently being offered around US$290-$300/tonne, free-on-board.

As harvest gets completed and more feed wheat becomes available, it may put downward pressure on prices, he noted.