December 15, 2010

Australian 2010/11 wheat exports set to skyrocket

Australia's wheat exports are bound for a sharp hike this fiscal year, in volume and value terms, although the optimistic outlook has dimmed a little since September, the government said Tuesday (Dec 14).

A substantial proportion of wheat exports in the year to June 30 is expected to be of feed grade after grain is downgraded from milling wheat due to wet weather at harvest, the Australian Bureau of Agricultural and Resource Economics and Sciences (Abares) reported in its quarterly Australian commodities outlook publication.

The adverse effect on total export earnings for Australia, a major global wheat exporter, is expected to be significantly offset by higher world prices.

Exports of wheat and wheat flour in 2010-11 are forecast at 16.6 million tonnes and valued at AUD4.73 billion (US$4.71 billion), down from an estimate in September of 18.2 million tonnes valued at AUD5.22 billion (US$5.19 billion), it said. Actual shipments in 2009-10 reached of 13.7 million tonnes valued at AUD3.69 billion (US$3.67 billion).

Australian wheat production, a key determinant of export availability, will rise to 26.8 million tonnes this crop year ending March 31, 2011, from actual output of 21.9 million tonnes last crop year, Abares said, reiterating a forecast from its Crop Report issued earlier in December.

The increased production reflects exceptionally good growing conditions across the eastern wheat belt, with higher production in this region forecast to more than offset lower output in Western Australia, it said.

Abares's world indicator price, US hard red winter wheat, free-on-board US Gulf of Mexico, is forecast to jump 34% in 2010-11 to average US$280/tonne, a forecast price increase that largely reflects expected lower world supplies, particularly from the Black Sea region.

The Australian net return on collective pool sales is forecast to average AUD322 (US$320)/tonne this year, up 29% from AUD249 (US$248)/tonne in 2009-10, it said.

Abares projects world production at 648 million tonnes, consumption at 658 million tonnes, closing inventories at 187 million tonnes and global trade at 120 million tonnes in 2010-11. For 2009-10, it estimated production, consumption, closing inventories and global trade at 677 million tonnes, 648 million tonnes, 198 million tonnes and 127 million tonnes, respectively.

In framing its forecasts, Abares assumed the Australian dollar in 2010-11 will average US$0.95 with a Trade Weighted Index of 72, compared with September projections of US$0.90 and 70 and last fiscal year's actual values of US$0.88 and 69, respectively.