Wheat Supplies in Australia See `Very Strong Interest,' AWB's Morison Says

Wheat shipments from Australia will continue at high levels, after jumping in July, as drought cuts supply from Black Sea region countries, CBH Group, the country’s second-largest exporter of the grain, said. 

Monthly volumes could continue at around 1.3 million metric tons for the next few months, Tom Puddy, wheat marketing manager for Perth-based CBH Group’s export division said by phone today. Shipments rose to 1.6 million tons in July from 1.2 million tons in June, according to Australian Bureau of Statistics data. 

Demand for wheat from Australia, the fourth-largest shipper, is rising after Russia banned exports because of the worst drought in half a century. Output has also dropped in Ukraine and Kazakhstan while in northern Europe weather damage has reduced supply of higher-quality milling wheat, AWB Ltd. General Manager Commodities Mitch Morison said today in a statement. 

“There is very strong interest for Australian wheat, both to make up for the lost volume in the global trade and supply higher-quality needs,” said Morison. “The interest is helping to generate better physical prices for Australian wheat on top of the general improvement in world prices.” 

Wheat for December delivery in Chicago rose 0.4 percent to $7.445 a bushel at 4:40 p.m. Melbourne time on speculation that the U.S. Department of Agriculture may pare its estimate of global inventories. The contract reached a 23-month high of $8.68 a bushel on Aug. 6.

Wheat Stockpiles

Australian wheat stockpiles may decline to 4.5 million tons at the end of October after dropping to 7.9 million tons at the end of July, Puddy said. The largest destinations for the exports in July were Indonesia, Yemen, Japan and Bangladesh, according to shipping data. 

“We are expecting routine tender business to emerge from the Middle East for new crop shipping,” Puddy said, referring to the December-January period. 

The country’s next crop is mostly harvested from October to early January. Some early crop has already been gathered in central Queensland, said Morison, who is visiting customers in Asia. East coast production from Queensland to South Australia had just received a boost from widespread rainfall, he said. 

“Notwithstanding the unfortunate people suffering from localized flooding in some areas, it’s a great start to the spring growth period and the timing couldn’t have been much better from the market’s perspective,” he said. 

The country’s wheat crop was forecast at 22.4 million tons, National Australia Bank Ltd. said Aug. 26, with risks from dry weather in Western Australia and a locust plague expected in eastern states. South Australia this week raised its wheat output forecast to 3.97 million tons from a July outlook of 3.5 million tons and said there was “good upside potential if spring goes well.” 

Production in Western Australia may range from about 5.5 million tons to 6 million tons, depending on rain, Puddy said. Output in the state last season was 8.2 million tons, according to the Australian Bureau of Agricultural and Resource Economics. Source: Bloomberg