A 37 percent jump in global wheat prices since early June has boosted sales by Australia, the world’s fourth-biggest exporter, reported “Kazakh-Zerno” NA with reference to the “Bloomberg“.
“A slight dip in the dollar, plus the combination of that rise, has provided us with some good selling opportunities,” CBH Group Chief Executive Officer Andrew Crane, 47, said in an interview in Perth. CBH is the country’s largest grain shipper.
Wheat soared as a lack of rain in Russia, Kazakhstan and the European Union and floods in Canada hurt crops. Price gains may be sustained because of the weather and “tight” supplies of corn, said Matthew Rutter, head of trading at CBH Grain, part of CBH Group. Wheat competes with corn for use in livestock feed.
“Without at least record yields the corn situation is still tight and that’s going to pull wheat along,” Rutter said in an interview yesterday. “We are coming out of a relatively burdensome” supply of wheat, “so things need to turn quite significantly to really drive prices higher,” he said.
Indonesia, Vietnam, Japan and China are so far the largest buyers of Australian wheat for the year to Sept. 30, according to the Australian Bureau of Statistics based on data to May 31.
The wheat surge had spurred grower sales before the next harvest and CBH was hedging new-crop supplies in Chicago, said Rutter. Harvesting lasts from October through January.
“The growers have been active in selling all grains, but we are only just past the seeding period and there is still a lot of production risk,” Rutter said. “So there is still a low proportion of that total crop that has been sold.”
The next wheat harvest in Australia may be 22 million tons, according to CBH estimates. Production is forecast at 22.1 million tons by the Australian Bureau of Agricultural and Resource Economics, up from 21.7 million tons last season.
Output of all grains in Western Australia may drop to 9.5 million tons because of dry conditions across parts of the growing region, Crane said. Weather models mostly signaled drier-than-average weather through September, he said.
CBH grain receivals from the past harvest were “just over” 11 million tons, Crane told the group’s annual meeting in March. Winter grains in Australia, including wheat, barley and canola, are mostly planted from April to June.
September-delivery wheat on the Chicago Board of Trade fell 0.3 percent to $5.8650 a bushel today. The most active contract plunged to a three-year low of $4.255 on June 9. The Australian dollar slumped to 80.67 U.S. cents on May 25, the lowest level since July 2009, after reaching 93.90 cents in April. The currency traded at 88.16 cents today.
CBH, founded almost 80 years ago as Co-operative Bulk Handling, has around 4,800 grower shareholders, according to its website. Crane, with 20 years experience in the grains industry in the United Kingdom and Australia, joined the group in 2003.
The biggest wheat shippers in 2009-2010 are the U.S., Canada, Russia, Australia, Ukraine and Kazakhstan, U.S. Department of Agriculture data show.