June 7, 2005

Feed grains shortage in Australia likely to be lessened with imports

Intensive livestock producers could import feed grain again this year if winter crops in eastern Australia fail in the face of a fierce drought like in 2002.

Agriculture Minister Warren Truss said that annual wheat crops in Australia's three eastern states and in South Australia might not even be planted if widespread rains do not fall in coming weeks. The country's livestock industries are also mostly located in the three eastern states of Queensland, New South Wales and Victoria where the drought has been most severe.

Australia imported about 430,000 tonnes of grain in the fiscal year ending June 30, 2003, according to official figures published in 2003, the last year when major quantities were imported. About 70 percent of this was feed wheat from the UK, while smaller quantities of corn, soybeans and rye were also imported.

Milling wheat futures on the Australian Stock Exchange tumbled to settle at A$196.50/tonne on Monday from A$218.50/tonne on Thursday ahead of a rain forecast in western agricultural areas in South Australia state from Tuesday.

Last week, domestic wheat prices appeared to be heading towards import parity levels as fears of low production levels surfaced, an exchange spokesman said. Import parity for wheat is probably around A$240 a tonne, with Canadian feed wheat "pretty cheap" and traded into South Korea last week, the trader said.

Rob Sewell, executive director of the Australian Lot Feeders Association, said the broiler chicken and pig industries are currently considering importing grain cargoes, with shipping to Brisbane city on the east coast from Western Australia. Shipping feed barley from Western Australia will alleviate some of the shortfall on the east coast, he said.