Australia
August 14, 2009

The world wheat market has continued its downward trend, on the back of increased supply estimates and falling demand, with the result that AWB has revised its price forecast for 2009/10 season wheat downward by $25 a tonne, giving an estimated pool return (EPR) for benchmark grade APW wheat of $265-275 a tonne (FOB, excl GST).

AWB’s Australian Commodity Management spokesman, Stuart Richardson, said that the whole international market was in “go slow”, with buyers reluctant to commit when they can see ample supply.

“You don’t like to talk about falling prices, but that is the reality of the market at present and there is just no upward pressure,” Mr Richardson said.

“When there is so much supply, the buyers hang back and only commit for their immediate needs, hoping for lower prices next time; it’s a spiral that continues until there is a shock to break it.

“Crops in the northern hemisphere have produced well, with strong numbers from the United States showing increased supply in an environment where their wheat exports are struggling for demand.

“In the European Union and Black Sea region the harvest is progressing steadily; EU production estimates have increased again and while the number for Russia is down a little, a larger percentage of milling wheat in Ukraine this season means there is still a very large volume of Black Sea wheat for export.

“Add the strong Australian dollar to the equation and you don’t have an attractive picture for Australian wheat prices in comparison to the last two seasons – still historically high, but not at the levels growers would like to see,” Mr Richardson said.

For specialist grades, AWB’s EPR for 2009/10 noodle wheat ANW1 is $250-260 a tonne (FOB, excl GST) and durum DR1 is $325-335 a tonne (FOB, excl GST) .

Estimated returns for AWB’s 2008/09 wheat pools are holding steady, with the EPR for APW on $325 a tonne in the Western Pool and $330 a tonne in the Eastern Pool (FOB, excl GST).

* WEA disclaimer - "AWB’s ability to export wheat in bulk is dependant on being granted reaccreditation under the Wheat Export Accreditation Scheme."

Website: http://www.awb.com.au

Published: August 14, 2009