March 31, 2004

Australia Anticipate Increased China Wheat Sales

Australian wheat production from the next crop likely will exceed a record 25 million metric tons produced this crop year ending March 31, Andrew Lindberg, managing director of monopoly wheat exporter AWB Ltd., said Wednesday.
 
He also said further sales of the cereal to China are likely in the short term.
 
Underpinning a likely production increase will be an expansion of the area planted to wheat next crop year, in part as a result of further destocking of animals from available cropping land, he said.
 
"The return despite the (strong) dollar is going to be pretty good" as well, encouraging farmers, he said on the sidelines of an annual conference of grower lobby Grains Council of Australia.
 
Lindberg declined to issue a forecast for new crop wheat output but agreed it likely would be over 25 million tons.
 
"Had there not been continuing drought conditions this year in Queensland and northern New South Wales, that crop probably would have been 3 million tons bigger," he said.
 
Australia, through AWB, is a major global supplier of wheat, and received about 19 million tons from farmers for export sales from the last crop.
 
Late in 2003, the company announced the sale of 1 million tons of wheat to China, the first major sale to that country since the late 1990s.
 
"We're still talking and we're still optimistic that we'll get some more
business done...in the near future," he said.
 
Longer-term, Chinese wheat stocks have declined, available farming land is contracting and farmers are leaving the industry, he said.
 
"Faced with the capacity to get the inputs (wheat) from this country, it would be a rational economic decision to do that," he said.
 
More broadly, Lindberg said AWB is working hard to secure more wheat sales to Iraq, on top of the 460,000 tons sale through a World Food Program tender announced last week, he said.
 
More generally, the last wheat crop now is "well sold," he said, with big sales to Egypt, Indonesia, China and more traditional customers.
 
"We've sold forward a lot of the crop," he said.
 
"We've still got some to sell, but we're in a very good position, and so we won't have a significant carryout at the end of the year, and that will set us up well if we do have a big crop," he said.
 
Lindberg also affirmed AWB remains on track to post a sharply higher profit this fiscal ending Sept. 30, 2004.
 
He previously estimated profit in a range this fiscal year of A$110 million to A$120 million.
 
"There's no reason to alter that," he said. "We're happy with it."
 
A half-year result will be issued in May.