May 26, 2004

 

 

Australia's AWB Eyes More Wheat Sales To China

 

Australian wheat exporter AWB Ltd. (AWB.AU) plans to sell more wheat to China, which is now a major swing factor in the global market, AWB's managing director Andrew Lindberg said Wednesday.

 

The likelihood of more sales to China forms just part of what is a promising global demand outlook for the cereal, he said.

 

AWB operates a monopoly over wheat exports from Australia, making it a major global supplier.

 

The company has already sold 1 million metric tons of wheat to China from the last crop in a sale announced late 2003.

 

"We're looking to do some further business if possible," Lindberg told a teleconference after issuing AWB's fiscal first half results.

 

"There's no doubt China is the big swing factor," in the global market, he said.

 

Estimates vary about the wheat requirements of the world's most populous nation, but he noted that China is taking agricultural land out of production and its wheat stocks are running down.

 

"They will be importing going forward," he asserted, with imports of 10 million tons in the year ahead "quite conceivable."

 

"We would certainly want to be a significant supplier in that environment," he said.

 

Lindberg also said the wheat-import needs of existing customers, Egypt and Indonesia, are growing, while AWB also plans on being a long-term significant supplier to Iraq.

 

"On the demand side, there are some hopeful signs," he said.

 

Meanwhile, major global wheat exporting nations seem to be returning to normal production levels this year, which will make the global market tougher to operate in, he said.

 

He was commenting after announcing an 81% rise to A$54.1 million in AWB's net profit in the fiscal first half ended March 31, 2004, from A$29.9 million in the year-earlier period.

 

The profit increase was mostly attributed to a jump in wheat production to an upgraded 25.2 million metric tons last crop year ended March 31, 2004, from a drought depleted 9.7 million tons in the previous year, and consequent higher throughput for AWB.

 

The company is "on track" to achieve its full year profit forecast of A$110 million-A$120 million before goodwill amortization and one-off costs, he said.

 

AWB has forecast wheat production this crop year in a range of 21 million tons to 24 million tons, based on normal seasonal conditions.

 

But some areas need more rains to plant crops, he said.

 

Wheat growing areas in Queensland, the north and west of New South Wales, and Western Australia are in "pretty good order" so far as planting rains are concerned, he said.

 

"It's basically Victoria and South Australia where we are looking for a bit more rain and southern New South Wales," he said.

 

AWB issued its production forecast after widespread planting rains fell over the past two days in formerly dry areas in central and southern areas of New South Wales state.

 

The rains continued in to the north of the state and into southern Queensland, where crop plantings were already well underway.