September 16, 2011

Australian wheat exports may be lower than official forecast

Australia's wheat exports is said to miss the government forecast as production will be less than expected, according to two of the country's banks.

According to a Bloomberg report, shipments may be 19 million to 19.5 million tonnes, said an economist at Australia & New Zealand Banking Group Ltd. That's about one million tonnes below an estimate for a record 20.4 million tonnes in the year starting October 1 from the Australian Bureau of Agricultural and Resource Economics and Sciences. Cargoes totalled 18.7 million tonnes this year.

While exports may trail the official estimate, they would boost supplies and potentially pressure prices. Wheat has tumbled 12% this month in Chicago on better harvests in the former Soviet bloc and Canada. Global stockpiles may be 194.59 million tonnes by May 31, 3%more than expected in August, said USDA. Australia estimates its harvest at a near record 26.2 million tonnes.

"It's possible, it's just not very probable in our eyes," said a strategist at Commonwealth Bank of Australia, who maintained a production forecast of 23.5 million tonnes. "We're going to have a smaller crop; that will obviously flow through to smaller end-use, of which exports is one source. We believe exports will be well below the 20.4 million tonnes."

Wheat for December delivery declined 0.6% to US$7.01 a bushel on the Chicago Board of Trade on September 15 and the most active contract has dropped 3.6 % in the past year.

The Abares forecast is about two million tonnes more than the median estimate of 18 million tonnes in a Bloomberg survey of eight analysts and traders last month and about three million tonnes more than predicted by the USDA.

"To get a 26 million number, at this point everything is going to have to go really right," said Deane from ANZ. "Even the short-term outlook I don't think is particularly great, the next seven to ten days, for rain. It doesn't give me a lot of confidence that we're going to have a 26 million ton number" for the harvest, he said.

No rainfall is forecast for New South Wales, set to be the second-biggest grower, in the four days to September 18, according to a weather model on the Bureau of Meteorology website. The state had below-average rainfall in July and the Murray-Darling Basin which extends from southern Queensland to South Australia, had the driest June since 1986, it said.

Dry weather in July and August on the east coast spurred concerns the nation may rely on a bumper crop in Western Australia, set to be the biggest producer, to boost the harvest.

Analysts at ANZ, National Australia Bank Ltd. and Commonwealth Bank of Australia all cut their harvest predictions in August, citing dry conditions on the east coast. ANZ lowered its forecast again this month.