By Boyd Champness

AUSTRALIAN farmers, faced with a world wheat glut, have been buoyed by the news that wheat prices are starting to rally on the back of the worst drought on record in some US Atlantic states.

With wheat prices dropping below US$3/bushel recently, some analysts had suggested that July 1999 represented one of the great lows in wheat prices this century.

One month later, Australian grain growers are smiling again as one farmers misfortune becomes anothers gain.

Hectic trading in Chicago wheat futures, which smashed turnover records on the Chicago Board of Trade and the Sydney Futures Exchange last week, was accompanied by price rises as news filtered through of potential crop losses in the USA.

According to the Stock and Land, a surge of more than 7% in Chicago wheat futures last Monday (9 August), followed by a 5% jump in Sydney Futures Exchange wheat futures the next day, has been maintained as prices across the entire grains and oilseed markets continue to gather strength.

AWB Ltd – the grower-owned monopoly that buys and markets Australias entire export wheat crop – has not yet raised its 1999-2000 wheat pool estimates despite fluctuating international prices.

The benchmark Australian Standard White remains at A$175/t (US$113/t or £71/t).

AWB Ltd international general manager Ted Laskie said the board was reluctant to change its estimates while the international wheat market was still reacting to the condition of northern hemisphere crops.

“We continue to see large fluctuations in US wheat futures and as the market looks today, we can expect to see continued volatility,” Mr Laskie told the Stock and Land.

“Having said that, we are however fairly optimistic in the markets long-term outlook.”

“We believe the market has hit its lows and doubt that it will drop to those lows again in the near future.”

Australias A$2.8 billion (£1.14bn) beef export industry has also been heartened by the price rises for wheat.

Meat and Livestock Australia manager of market information and analysis Peter Weeks told the newspaper that significant heatwaves on US crops would aid Australias beef export trade through its impact on the supply of fed pork and poultry to the American market.

Cattle Council of Australia executive director Justin Toohey told the newspaper that higher grain prices in the long term would be expected to lead to lower numbers of US cattle on feed and to cause a new round of herd liquidation.