Australian grain: some rain falls as wheat harvest begins

Good rainfall in Australia's north-eastern grains belt in the past week came too late to help the wheat crop as harvesting began, but lighter rain in the south did benefit drought-hit wheat crops there.
"It's a little bit too late (for wheat). But it's good for sorghum, excellent for sorghum," said broker Paul Cochran of Fox Commodities, based in Towoomba, southern Queensland. Australia is just beginning to plant its summer sorghum feed grain crop, mainly in Queensland state, and this week's rain would help crops already planted and those about to be planted "enormously", Cochran said.
Rain which fell across parts of Victoria, South Australia and Western Australia this week was enough to halt the decline in the Australian wheat crop, which most traders now see at around 13 million tonnes half forecasts of 26 million tonnes.
Australian wheat futures eased from their recent record high of A$492 a tonne on the Australian Stock Exchange, to A$428 for the January 2008 contract, despite a limit up rise for Chicago wheat futures on Thursday.
The Australian market was also responding to a sharp rise in the Australian dollar to 23-year highs over 90 US cents, as well as to recent falls by Chicago wheat, Garry Booth of commodities broker MF Global said. The arrival of rain had prompted some growers and traders to release stocks to end users, he said, and could still rescue some of the crop in southern Australia.
This left the market divided on how much of a disaster Australia had had with its drought-affected grain crop. "There are those who believe that we have got a disaster on our hands and there's not much rescue to be made here," said Booth. "There are others who think that while it is a bit of a shocking crop, it's not the disaster some people thought it was."
Quality is poor in grain being produced by the early harvest in Queensland, with East Coast grains handler and trader GrainCorp Ltd this week reporting high screenings, or small-sized grain, in deliveries.
"(This) will tighten up an already tight milling wheat supply and demand," it said. Broker Cochran said the harvest in central Queensland and northern New South Wales was producing reports of up to 60 percent screenings in some areas. "It's a bit of a shame but it's probably not a big surprise to the market given that we have had such a dry finish," he said. Other traders said that grain imports for animal feed, to make up tonnage's killed by drought, were still not near, although imports of palm kernel and tapioca chips were being priced.