November 8, 2011
Australian wheat exports may hit record amid low prices
Wheat exports of Australia is likely to reach its highest level enhanced by the geographical spread of a solid harvest, and prices which could probably beat those of the Black Sea.
Rabobank pegged the 2011-12 Australian wheat harvest at 25.6 million tonnes, a figure which, while making it the country's third biggest ever, was behind some other estimates, including those from domestic officials and forecasters at the USDA.
However, the bank was more upbeat than both organisations on Australia's wheat export prospects, which are set to far exceed the 18.3 million tonnes believed to have been shipped last season, as well as the record set 15 years ago.
It estimated shipments at potentially "in excess of 21 million tonnes", above a 20.4-million-tonne forecast in September from Australian officials which raised eyebrows, viewed by one analyst as "simply too high".
This year's crop, while lower than last year's record 26.3-million-tonne harvest, is more evenly spread, "enabling all ports to be utilised", Rabobank analyst Dean Smith said.
Last year's production was focused on the east coast, which has relatively underdeveloped crop export logistics, compared with Western Australia, the country's top grain state, which suffered a drought-depleted harvest.
Furthermore, Australia has record stocks, of 8.25 million tonnes, left over at the close of 2010-11 in September, boosting exportable supplies this season.
Indeed, these factors looked set to weigh on prices of Australian wheat, potentially making it cheaper than rival supplies from the Black Sea, typically the keenest competitor on export markets.
"The Black Sea region has consistently been the cheapest origin of wheat since the end of July," Smith said. "However, Australian origin wheat has recently been priced at or close to Black Sea values. Given Australia's burdensome old-season stock position and a large new season harvest that has just begun, it is quite possible that Australia may become the cheapest origin of wheat over the coming months, or at least during the Australian harvest."
At a wheat tender by Egypt, the top importer, last week Australian wheat was offered at US$262 a tonne, actually more expensive than Argentine, French or Black Sea supplies, besides requiring higher shipping costs.
Russian and Ukrainian wheat won at an average price of just under US$251 a tonne.
Overall Australian wheat prices also looked set to be depressed by a crop which, thanks to some harvest rains, looked set to "be of below average protein" for a second season, Rabobank said.
The comments came as farm officials in Western Australia flagged "some weather damage due to excessive rain in northern areas and patches of hail and storm damage through much of the wheat belt".
The rains, besides lowering gluten levels in affected areas, had damaged up to 75% of cut hay, which the state also exports.
And Western Australia grain handler CBH Group on Monday (Nov 7) revealed the first wheat blending under an optimisation system introduced this year to help farmers make the most of mixed-quality crops.
However, the state officials were optimistic over the size of Western Australia's overall grains harvest, pegging it at 13-14 million tonnes.