June 24, 2011

 

Australia beings selling 2011-12 wheat harvest

 

 

Exporters in Australia loaded with huge inventories have begun making offers from the wheat crop that will be harvested in the last quarter of the calendar year, and with declining prices, Southeast Asian millers are expressing interest, trading executives said Thursday.

 

Australia's wheat exports in the marketing year that begins in October are forecast at 18 million tonnes, the highest in more than a decade, due to high inventories and possible back-to-back bumper crops, the International Grains Council said recently.

 

The supply of wheat is not as tight globally as was projected earlier, and Australia is already offering its next crop, which is still being planted, said a trading executive.

 

"There is a lot of snooping around and millers in Southeast Asia are already enquiring for the next crop of Australian wheat," an exporter in Australia said.

 

Australian General Purpose wheat with 9% protein is being offered around US$299 a tonne, Australian Standard White grade with 9% protein around US$309/tonne and Australian Premium White grade with 10.5% protein around US$319/tonne, free on board for December-January shipment in bulk from the East Coast, traders said. Offers from the West Coast are typically at least US$10/tonne higher than from the East Coast, traders said.

 

Prices are under downward pressure due to likely back-to-back bumper crops, rising inventories and declines in futures prices, the said.

 

Current crop wheat prices have also declined by up to US$50/tonne in the last two weeks, and the APW grade is now offered around US$333/tonne, FOB, for shipment in October.

 

A substantial portion of Australia's current wheat crop was damaged due to heavy rains and flooding and is being sold as feed wheat or blended as low-quality milling-grade wheat.

 

The feed-grade and low-quality milling-grade wheat is facing strong competition from the Black Sea region, because Ukraine removed export quotas last month and a ban on grain exports imposed by Russia due to a drought last year will expire on June 30.

 

Australian feed wheat is now offered around US$263/tonne, FOB, for bulk shipment in September.

 

The country's stockpiles at the start of 2011-12 marketing year on October 1 may reach 8.3 million tonnes, up 46% from a year earlier, IGC said in its monthly report for May.

 

Australian government forecasts project that 2011-12 wheat output will be little changed around 26.2 million tonnes due to record acreage, and this may propel exports to a little over 20 million tonnes.