June 4, 2007

 

De-regulation of container wheat may help Australia's wheat exports

 

 

Australia's de-regulation of wheat exports in containers and bags is likely to encourage new exports to China, traders said on Friday.

 

The new trade would take advantage of empty containers from China along the eastern Australian coast, they said.

 

Global grains groups are all expected to chase container-based exports after the Australian government freed this trade.

 

Australian grain handler and trader GrainCorp Ltd. detailed plans this week to ramp up wheat exports in containers.

 

Australia retained its controversial bulk wheat export monopoly in March after a long consultation process, but opened the container trade.

 

As freight rates are high now, there is a distinct price advantage in using the empty Chinese containers.

 

Containerised freight rates from Australia to China could be negotiated at US$25 a tonne for a "box", compared with bulk wheat freight rates of US$35 a tonne.

 

However, China was a market which even monopoly wheat exporter AWB found difficult to penetrate.

 

Australian wheat exports to China jumped from just 50,000 tonnes five years ago to 755,000 tonnes in 2003/04, and to 1.9 million tonnes in 2004/05.

 

However, Chinese government measures to encourage wheat planting and food security has caused Chinese imports of Australian wheat to fall to 303,000 tonnes in 2005/06.

 

Still, the same empty containers could help Australia export wheat to Japan.

 

One trader estimated that Australian exports of containerised wheat could now double, to around 1.5 million tonnes a year.

 

The Australian Grain Exporters Association, representing international grains trading giants such as Cargill Inc. and Louis Dreyfus, has welcomed the limited de-regulation of Australia's wheat export trade.