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Veteran Advisor

An Article on Aussie Wheat

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.

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5 Replies
Veteran Contributor

Re: Harvest there been over for almost a month JR,

don't know if I buy any fear stories on it at this late date.

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Senior Contributor

Re: Harvest there been over for almost a month JR,

Sorry friend. I have no idea where you get your info but they are just getting into harvest in the most important areas in OZ.

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Veteran Advisor

Re: An Article on Aussie Wheat

Actually when I read this article which was written on Dec. 3, I thought if anything it would cause a two sided move.

1. Milling wheat has alot of upside.

2. Could be negative corn as feed wheat is a real competitor to corn, 

 

Again just something else to put smoke in the room.

 

And the rain is helpiong boost dairy output as the grazing is picking back up. JR

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Advisor

More on Aussie wheat

In a story fresh off the wire service,  (click here) Australian milling wheat prices are said to continuing to react to "unfavorable weather conditions around globe," and the prospect of a shortage of high-quality grain.
Soft Dec RWW on the CBOT, front-month contract, climbed 14 cents, highest settlement for a nearby contract in 4 months.
Gains were "more pronounced " at the KCBOT and MGE, which trade higher-protein hard red wheat than CBOT. "Nearby KCBT wheat contract settled at highest level since June 2008, MGE wheat settled at highest level since August 2008. AUD/USD last 0.9898, recovering a little after falling to 0.9852 late yesterday from 0.9926," DJ reported.
"On Monday, ASX milling wheat futures deliverable January in New South Wales climbed A$10 at A$339/metric ton; ASX milling wheat futures deliverable January in Western Australia rose A$6 at A$346."
The drama continues.....
John
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Veteran Contributor

Re: And more here too

Today's estimates from ABARE Informa are a record 43.2 mmt crop there. 

22% above last year's crop.

 

If the deal gets nipped in the 20% range...AU would still have another close to a record crop.

 

Interesting thing is, wheat harvest there been running 5 weeks behind normal, so far. 

Reports are it'll take perhaps another 5 weeks more to finish it too.

 

 

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