Just one more thing to put in your pipe and smoke.
Half of east Australian wheat 'faces downgrade'
Heavy rains will leave up more than half milling wheat on Australia's east coast downgraded to feed, ANZ said, stoking concerns which are eroding export hopes and sending prices soaring worldwide.
Farmers, already up to five weeks behind with harvesting, face further rains, with up to 50 millimetres (2 inches) expected on Wednesday alone in parts of New South Wales and Victoria.
"The weather forecast for next Wednesday has the market spooked," ANZ said.
"Very few, or any, [growers] will start harvesting again before this major front hits."
With at least 60% of the east coast crop yet to be harvested, the rains "put up to 7.5m tonnes" of the region's milling wheat at risk of being cut to feed, a figure which excludes South Australia.
Export implications
Losses at this level would represent more than half the east coast harvest, which ANZ has estimated at more than 13m tonnes, the biggest in at least 25 years, after rains earlier in the season boosted yields.
They would also cut by 2m tonnes to 4.5m tonnes hopes for the region's milling wheat exports, the bank added.
"The situation doesn't have a larger impact on exports because our forecast already assumed milling wheat exports would be constrained by logistical issues."
Separately, Luke Mathews at Commonwealth Bank of Australia warned that "lower production and associated high prices" meant that the country's overall exports "will not meet prior forecasts".
'World's most expensive wheat'
Indeed, prices of Australian wheat continued to rise on Friday, with benchmark east coast milling wheat soaring 6.1% to Aus$329.00 a tonne, taking gains over the week nearly to 29%.
The rally, and the prospect of weaker shipments from the southern hemisphere's top wheat exporter, have helped lift wheat prices in other exporting countries too, with Chicago's December lot adding 2.4% to 7.23 ½ a bushel in early deals on Friday, taking its gains to the week above 11%.
Paris wheat for January was 0.5% higher at E235.00 a tonne, up more than 7% for the week, with its London peer up 1.9% at a fresh two-year high for a spot contract of £188.45 a tonne.
Nonetheless, Western Australia wheat was "easily the most expensive wheat in the world", Mr Mathews said, at Aus$338.00 a tonne, up 0.9% on the day.
That price is equivalent to $331, E250, or £212 a tonne, or $9.00 a bushel.
Western Australia prices have enjoyed sustained strength thanks to the drought which has slashed the harvest in what is usually the country's top grain-growing and exporting state.
