March 23, 2012

 

 

The crop handlers in Australia boosted hopes of making the country into the top 2 wheat exporter by slashing their inventories by over two million tonnes in a month, beating a high set last May 2011.

 

The quantity of wheat stored in bulk grain handlers' elevators tumbled by 2.3 million tonnes last month, only the second time in recent history that the figure has topped two million tonnes, official statistics showed.

 

While this decline does not represent exports exclusively, with Australia's domestic consumption running at an average of 600,000 tonnes a month, the figure appears to pave the way for a bumper figure when the country on April 4 unveils grain export data for February.

 

It may also indicate that the country is getting to grips with the logistical squeeze which had appeared to represent a potential barrier to shipments hitting the record 21.2 million tonnes that Abares, Australia's official crop bureau, has forecast.

 

RMI Analytics, the Swiss-based malting barley consultancy, last week restated concerns that "Australian port facilities will reach their capacity limits this year", terming shipping slot procedures as "not very helpful for maximising utilisation rates for export terminals".

 

Last month's decline in grain handlers' inventories, in what is the first clear month after the rebuild in stores after harvest, is 29% more than achieved in February 2010, and higher than in any month since at least 2008.

 

The previous high, of two million tonnes, was set in May last year.

 

And it represents a second fillip for Australia's wheat exports in two days, after China was on Wednesday said by traders to have bought about 350,000 tonnes of feed wheat from Australia this week, at about US$280 a tonne including freight.

 

"China may be turning to feed wheat because of current high corn prices," Lynette Tan at Phillip Futures, the Singapore-based broker, said. "Corn prices are still very steep despite the drop away from the highs," besides trading at a premium to wheat, "a trend diverged from their traditional price pattern".

 

Separate data on Wednesday showed China's imports of wheat hit a record 372,000 tonnes of wheat last month, if below the 521,000 tonnes of corn brought in.

 

Rabobank has forecast China's purchases of Australian wheat will double in 2011-12 to nearly 1.2 million tonnes, thanks to the "comparative advantages" in shipping costs, compared with buying from exporters such as Argentina or the US, and the rich quantity of Australian supplies.

 

Indeed, wheat stocks in the hands of Australian grain handlers remained at the end of February at historically high levels, at 23.3 million tonnes, even after the sharp decline, which was led by New South Wales, where stores shrank by 826,000 tonnes last month.

 

In Western Australia, Australia's top wheat-producing state, stores held by bulk handling companies fell by 761,000 tonnes.

 

In the October-to-January period, the first four months of the Australian 2011-12 marketing year, exports hit 7.1 million tonnes, a rise of 28% on-year.

 

Abares' export estimate of 21.2 million tonnes for the full season would make the country the second-ranked wheat shipper, behind the US.