August 26, 2011

 

Australian new crop wheat sales hit 500,000 tonnes

 

 

In anticipation of a bumper crop, Australia has already made advance sales of at least 500,000 tonnes of new crop wheat that will be harvested in Q4, a senior industry executive said Thursday (Aug 25).

 

Exporters have sold several cargoes from the upcoming crop to buyers in Southeast Asia and the Middle East through both private deals and tenders, Tom Puddy, head of marketing with CBH Grain, one of Australia's largest grain co-operatives, said.

 

He said this excludes several positions taken by multinational companies for the next Australian harvest, which are difficult to estimate.

 

Traders had said in June that Australia had started selling new crop wheat when it was still being planted.

 

Puddy said over the last two months, aggressive sales were made for November, December and January shipments.

 

He said Western Australia's wheat output is likely to almost double to 8-9 million tonnes from 4.5 million tonnes in 2010-11, when it was hit by a drought.

 

Puddy pointed that unlike this year, a major part of the exportable surplus in the next marketing season that begins October, will be from Western Australia because the region's local wheat consumption is under 500,000 tonnes.

 

He said once the supply situation stabilises, exporters will work with wheat buyers in Japan and South Korea to revert to earlier blending standards.

 

Due to unusually low wheat production in Western Australia this year, Japan and South Korea relaxed the standards for blending of Australian Noodle Wheat with Australian Prime Wheat.

 

There is, however, some concern about potential future damage to the crop due to frost. "There are no reports of such damage so far but we are now heading into the frost season and few wheat growing areas are susceptible," he said.

 

Puddy said drought conditions prevail in parts of New South Wales but any decline in output may be offset by return to normal production in Western Australia.

 

Australia may still produce at least 24 million tonnes wheat in 2011-12, close to the record 26 million tonnes this year, he said.

 

Due to the record output last year, mostly in Eastern Australia, the country is sitting on a large stockpile most of which had been downgraded to feed grade after heavy rains and flooding earlier in the year damaged some of the crop.

 

Puddy said Australia may still have around seven million tonnes of wheat stocks by end-September, of which around 60% will be feed-grade.