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Australian Wheat Demand Increases on Russia Drought (Update1)
2010-08-05 04:14:35.196 GMT
(Updates with comments in ninth paragraph.)
By Wendy Pugh
Aug. 5 (Bloomberg) -- Wheat buyers are seeking supplies
from Australia, the world's fourth-largest exporter, as drought
slashes production from the Black Sea region, the nation's
biggest grains shipper said.
"There is plenty of demand that is coming back into the
Australian region," Tom Puddy, wheat marketing manager for
Perth-based CBH Group's export division, said by phone today.
Wheat futures advanced to the highest in almost 23 months
on concern that Russia, the third-largest exporter, will limit
shipments as the worst drought in at least 50 years slashes
output. Supplies from the Black Sea region had earlier been
priced cheaper than Australian wheat, CBH said in April.
"Basically that whole region was awash with wheat for the
last 18 to 24 months and there was plenty of wheat on the global
market and the situation has just changed now," Puddy said.
"With the prices rallying so much now, a lot of the users are
sort of in shock," he said.
Wheat for December delivery, the contract with the largest
open interest, advanced as much as 1.2 percent to $7.6475 a
bushel in Chicago, the highest price since September 2008.
Prices, which reached a record $13.495 in February 2008, have
surged about 80 percent since this year's low in June.
Part of the demand for Australian supplies was coming from
traders who had expected to purchase low-cost wheat in global
markets to meet sales commitments, Puddy said. There is also
demand for new-crop supplies even as some buyers are reluctant
to purchase because of the price surge, he said.
Bulk Shipments
Western Australia exported 6.8 million metric tons of wheat
in the year to Sept. 30 2009, accounting for more than half the
national total for shipments in bulk, according to Wheat Exports
Australia.
The nation, which harvests its crop from about October to
early January, has reported its best growing conditions in more
than a decade for the current crop in parts of the eastern
states while dry weather is cutting output in the west.
Western Australian wheat output may decline to about 6.5
million tons and may drop further, Puddy said. "If we don't get
rain in the next 10 days or so we are looking at a six million
ton WA crop," he said, referring to the state's abbreviation.
Production in the state was 8.2 million tons last year,
according to the Australian Bureau of Agricultural and Resource
Economics. National production is forecast at 22.1 million tons,
the bureau said in a June 16 report.
Output in Russia, the third-largest shipper in the 2009-
2010 season, may drop 19 percent to 50 million tons this year,
the U.S. Department of Agriculture said in a report on Aug. 2.
Exports may decline 23 percent to 14 million tons, the
department's Foreign Agricultural Service said.
Shipments from the U.S. are also currently hampered by
congestion at ports because of the country's active corn and
soybean shipping program, Puddy said.
For Related News and Information:
Top commodity stories: CTOP <GO>
Top agricultural stories TOP AGR <GO>
Most read Australian news: MNI AUD <GO>
--Editor: Ravil Shirodkar, Andrew Hobbs
To contact the reporter on this story:
Wendy Pugh in Melbourne +61-3-9228-8736 or
wpugh@bloomberg.net.
To contact the editor responsible for this story:
James Poole at +65-6212-1551 or
Jpoole4@bloomberg.net.
