August 21, 2008

 

Australia ASX wheat at 5-month high as demand rises
 

 

Australia's benchmark wheat futures contract rallied Thursday (August 21, 2008) to levels unseen since late March, due in part to demand from Iran for high quality milling wheat, said Brett Cooper, a senior client liaison adviser at MF Global Australia Ltd.

 

Around 0500 GMT, the ASX January 2009 contract had last traded at AUS$392/metric ton, up AUS$9 from Wednesday's settlement and a handsome 24 percent gain from a recent low of AUS$317/tonne on Aug. 5, he said.

 

While wheat's global balance sheet has eased somewhat compared to six months ago and there is plenty of feed wheat available, "high quality milling wheat is tight enough to probably lend a bit of support," he said.

 

Iran has since June 1 bought more than 1 million tonnes of US hard red winter wheat, ending a 27-year hiatus, a sign of the limited options for importers seeking large quantities of high-quality grain, the Wall Street Journal reported Thursday.

 

Drought is expected to slash Iran's domestic production this year.

 

The Australian market also has been a little nervous about recent dry weather in New South Wales, where ASX wheat futures are deliverable, and has started to build in a modest dry weather premium, he said.

 

The market is alert but not alarmed, Cooper said.
   

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