Bumper US crop pushes down Australian wheat prices
By Boyd Champness
A BUMPER wheat crop in the United States and a 22-year low in US wheat futures has forced the Australian Wheat Board (AWB Ltd) to drop its 1999/2000 pool return estimate by A$5/tonne (2/t).
The move by AWB Ltd – the now-privatised but formerly government-owned marketing body that buys and sells Australias export wheat – will wipe more than A$100 million (40m) from grower returns.
The company has now set its estimate for Australian Standard White, the pricing benchmark for wheat, at A$170-$180/tonne (69-73.50/t).
According to the Stock and Land, the price fall tracks a 7% decline in December wheat futures at the Chicago Board of Trade in the past month.
Between 7 June and 7 July, as much as 19US/ bushel has been wiped off CBT futures as farmers prepare to harvest one of the largest coarse grain crops ever grown in the Northern Hemisphere.
The US Department of Agriculture is now predicting that global wheat production will reach 575 million tonnes, a further 5 million tonnes above its previous estimate.
The USA alone will produce about 63.4 million tonnes in what will be its third-largest crop ever.
“All this paints a fairly bleak picture for international wheat prices and today we have called the market as we see it,” AWB Ltd general manager Ted Laskie told the Stock and Land.
But Australian growers delivering to the export pool system will receive higher prices than their US counterparts, according to AWB Ltd.
AWB Ltd national product manager Pat OShannassy told the paper that there were two reasons for this – the weaker Australian dollar benefits export sales of old crop, and the higher standard of Australian product.
“Our pools performed well this year (1998-99),” he said. “We got some real premiums for quality. US soft winter wheat is low quality wheat. Typically we have better quality wheat than them.”
Grains Council of Australia president John Lush told the paper that it would be difficult to make money out of wheat this year.