December 10, 2007

 

Australia AWB raises estimated returns on export wheat sales

 

 

Australian wheat exporter AWB Ltd. (AWB.AU) on Monday (December 10, 2007) raised its estimate of pool returns for most grades of wheat to be harvested by the year-end, citing the strong global wheat market the past week and the weaker Australian dollar.

 

AWB's estimated the gross return on its number 1 pool for new crop benchmark Australian Premium White grade of 10.5 percent protein rose A$10 to A$418 a  tonne, FOB; Australian Prime Hard grade of 13 percent protein rose A$10 to A$433/tonne; feed grade was unchanged at A$305/tonne; and Australian Premium Durum was unchanged at an estimated A$600/tonne.

 

The rise in the number 1 benchmark grade pool extends gains from A$385/tonne in mid-November.

 

In its number 2 pool for the current crop, the estimated return for the benchmark grade rose A$14 to A$396, while that for Australian Prime Hard also rose A$14 to A$411.

 

David Johnson, general manager of the pool, said that as the harvest draws to a close, AWB is closing its number 1 pool to protect wheat growers who committed and delivered to this higher-yielding pool.

 

The estimated lower return for the number 2 pool reflects an anticipated fall in world wheat prices when the northern hemisphere harvest begins in mid- to late-July, he said in a statement.

 

AWB held unchanged its estimate of pool returns for the 2006 crop, with the benchmark grade steady at an estimated gross return of A$239.50/tonne, FOB.

 

AWB pools returns from its export wheat sales and deducts costs before paying growers. Sales from a pool can continue for more than 18 months after harvest, depending on production and demand.

 

Australian wheat production is facing another poor year with the industry focusing on a crop around 12 million to 13 million tonnes, up from an actual 10 million tonnes in 2006 but still only about half of the 25 million tonnes produced in 2005.

 

After domestic wheat demand around 7 million tonnes is met, the balance is available for export, usually making Australia a major global supplier of wheat.

 

The next pool estimate update is scheduled for Dec. 17.

 

A$1 = US$0.879 (Dec. 10)