August 6, 2008
Australian wheat futures helped by US gain
Australian wheat futures are well supported Wednesday (August 6, 2008) on a combination of a positive lead from US markets and a weaker Australian currency, Andrew Woodhouse, a risk adviser at agricultural commodity manager Advance Trading Australia Pty Ltd said.
The most active Australian contract - ASX January 2009 - was untraded at 0530 GMT on a spread of AUS$322-AUS$325 a tonne after settling Tuesday at AUS$320/tonne.
The Australian dollar was quoted at US$0.9176 at 0530 GMT, extending a decline from a 24-year high on July 15 of US$0.9849, a weakening that helps raise the competitiveness of Australian wheat on world markets and potentially increases returns to Australian exporters.
US wheat futures jumped Tuesday, boosted by short covering and the unexpected sale of 175,000 tonnes of US soft red winter wheat to Egypt. CBOT September wheat climbed 21.25 cents to US$7.80/bushel.
Woodhouse said Advance Trading continues to project an Australian wheat crop of between 22 million and 24 million tonnes, a figure supported by July rains.
Most growers are suggesting they're in a pretty good position at the moment, with the crop developing well, little weed pressure, and vigorous growth, he said.
There are concerns going into the key growing months of August and September, but given current general conditions there would not be downgrading of the crop at this stage, he said.
Earlier Wednesday, the government's Bureau of Meteorology reported near-normal rainfall in July over large parts of southern Australia, where most wheatlands are located.
Woodhouse said he does not see wheat values "being pushed down too much further" from current levels, despite Northern Hemisphere crops coming onto the market.
Given tight global stocks and the poor quality of some Black Sea and Baltic Sea wheat harvests coming onto the market, good quality, hard milling wheat varieties that Australia exports could be in short supply this year, supporting prices, he said.
