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Wheat in Australia’s top grain growing state became – briefly – the world’s priciest, as expectations for the newly-started harvest took a further hit, and underpinning forecasts of a sharp drop in exports.

A price of Aus$330.00 a tonne hit by Western Australia wheat futures – equivalent to $340.00 a tonne, or $9.25 a bushel – meant the grain "is now the most expensive in the world", Commonwealth Bank of Australia analyst Luke Mathews said.

In fact, a rise in Minneapolis wheat, high protein, in early deals on Wednesday to $9.30 a bushel ($341 a tonne) reaffirmed its place as among the world’s dearest on traded markets, ahead too of the E258.00 ($338) a tonne at which Paris wheat for November was trading, or E256.60 a tonne for January delivery.

The rise in Western Australian wheat prices to some $40 a tonne ahead of the value of east coast supplies came amid fresh market ruminations over the competitiveness of supplies from different origins, as Egypt’s state grain authority flagged a lack of clarity over offers of Black Sea grain.

Ukraine grain traders have stockpiled 540,000 tonnes of wheat for export, in addition to the 3m tonnes shipped already in 2012-13, for fear of government trade curbs to protect domestic supplies, Kiev-based consultancy ProAgro said.

‘Declining production prospects’

However, prices of Western Australian wheat are being elevated by ideas of further yield damage to dry weather, after key early-October period which represented the last chance for crop revival passed without the rains needed to boost grain fill.

"The strength in Western Australian wheat is related to declining production prospects," Mr Mathews said.

"Minimal rainfall has been recorded through the Western Australian wheatbelt in October, resulting in further reductions in yield potentials."

Some analysts "are now talking about a 5.5m-6.0m tonne Western Australian wheat crop", well below the CBA forecast of 7m tonnes, and the 11.7m tonnes achieved last year, he added.

‘Yield estimates reduced’

A harvest at the lower levels being suggested would likely see Western Australia surrender its title as the country’s top wheat growing state, with the New South Wales crop pegged by state officials at 6.88m tonnes.

And the weakening harvest prospects, and high prices, come at a time of lowered expectations for Australia’s wheat exports in the newly-started 2012-13 season, with the US Department of Agriculture last week slashing its estimate to 18.0m tonnes, a 28% drop year on year.

Separately, ideas of further damage to Western Australian crops were supported by a 45,000-tonne downgrade, to 860,500 tonnes, by the Australian Oilseeds Federation to its estimate for the state’s canola harvest.

"While crops in the north have fared better than initially anticipated, crops in the southern areas have had yield estimates reduced," thanks to "poor" rains, the federation said.

The group made a small upgrade, to 2.74m tonnes, in its estimate of the total Australian crop, reflecting "well-needed rains" in many areas.

http://www.agrimoney.com/news/wa-wheat- … -5111.html

Statistics: Posted by yoda — Wed Oct 17, 2012 11:58 am