December 11, 2006

 

Australia AWB says high wheat prices spur short-term buys

 

 

The high price of wheat has shifted buying patterns to a short term or hand-to-mouth basis, as opposed to purchases over longer periods when prices were lower, Peter McBride, a spokesman for Australian wheat exporter AWB Ltd, said Monday (Dec 11).

 

"(Buyers are) buying one or two months ahead, so it's more hand-to-mouth than long-term buying," he said by telephone.

 

With the price of wheat just shy of 10-year highs, people are not buying for the year as they have in the past, he said.

 

AWB is managing its export customer list and forward demand to take account of a slump in export wheat availability to about 4 million tonnes of the current crop from 18 million tonnes previously, following a drought-induced slump in production, he said.

 

In particular, AWB wants to meet the needs of its long-term customers Japan, South Korea, Malaysia and Indonesia, he said.

 

"There's been no discretionary sales," he said.

 

McBride was responding to a report in The Australian newspaper Saturday that said AWB has sold forward 1 million tonnes of wheat at A$240 a tonnes, but has only received 800,000 tonnes into the national export pool, leaving it needing to either buy wheat at market prices or to dip into a 3 million tonnes residual of last year's pool.

 

On-market buying would result in a loss of A$10 million or so, while sourcing the cereal from the 3 million tonnes residual from last year's pool would reduce the price paid to farmers, the report said.

 

McBride denied the accuracy of the report, which he said concerned AWB's hedging programme.

 

"We have stated that we were affected" by the unprecedented price volatility in wheat futures on Chicago Board of Trade, he said.

 

The position of AWB's hedging and foreign exchange programme is reflected in the current estimated pool returns for export wheat, he said.