May 20, 2008

 

Drought worries drive up futures of Australian wheat

 

 

Concerns about a lack of rain in New South Wales state have helped Australia's most active wheat futures contract - ASX January 2009 - extend Monday's gains, Australian Securities Exchange Agricultural Commodities Market Development Executive Dougal Hunter said Tuesday (May 20, 2008). 

 

After rising A$12.00 a tonne Monday, early Tuesday the contract was trading AUS$11.50 higher at AUS$360.00/ton.

 

Hunter attributed the gains to insufficient rain from a weather system that passed over New South Wales and Queensland states over the weekend, noting that ASX milling wheat contracts are deliverable upcountry in the zones of Newcastle Port and Port Kembla in New South Wales.

 

The ASX January 2009 feed barley futures contract traded down A$1.00 at A$290.00 Monday, and has not traded Tuesday, a move that reflects the different basis of the wheat and barley contracts, he said.

 

US wheat futures jumped Monday on concerns about dryness in Australia and in a rebound from recent losses, analysts said, with Chicago Board of Trade July wheat climbing 15 1/2 U.S. cents to US$7.91/bushel.

 

The catalyst for the rally was "disappointing rain events" in Australia during the weekend, said Chad Henderson, analyst for Prime Agricultural Consultants. Australia saw an increase in rain during the past 10 days, but moisture was on the light side in the majority of Queensland and New South Wales, according to Cropcast Agricultural Weather.

 

Queensland and New South Wales have the most immediate need for moisture, as wheat seeding is under way there, Cropcast said.

 

Figures issued for the week to early Monday by the government's Bureau of Meteorology, showed rainfall of 25-50 millimeters in southern wheatlands in South Australia and Victoria, with falls of 15-25 mms in adjacent areas.

 

But lighter rains fell in New South Wales with most eastern and southern wheat-growing areas receiving 5-15 mms, the bureau said.

 

(US$1 = AUS 1.042 )