September 6, 2011

AWB lifts estimated wheat returns

Australian wheat exporter AWB Ltd. (AWBZY), a unit of Cargill Inc., revised up its estimated returns on collective sales of wheat from the 2011-12 crop in the year ending March 31, 2012.

The company lifted its estimated returns on pooled sales of benchmark Australian Premium White grade wheat by A$11 (US$11.64) to A$319 (US$337.76) a tonne, free on board, while Feed one grade returns are up A$16 (US$16.94).

While the Australian dollar remains strong and the wheat market volatile, US wheat futures have strengthened due to a stressed US corn crop and an already-tight US corn balance sheet, AWB spokesman Jon White said in a statement.

As corn and wheat substitute each other as feed, tight corn supply drives up wheat demand, boosting prices.

He said that over recent weeks, Eastern European wheat prices, considered to be the cheapest global wheat, have risen substantially in line with strong demand.

When combined with a predicted lower corn supply out of the US, this translates into higher expected prices for Australian wheat, he said.