Australia wheat exports slow; more strain ahead

Wheat exports from Australia, typically the fourth biggest exporter of the grain, fell 20 percent in June from the previous month and the return of Russia to the export market could put further pressure on sales, traders said on Friday. Shipments dropped to 1.46 million tonnes in June from 1.83 million tonnes in May, as buyers held back, waiting for a restart of supplies from Black Sea region, while aggressive selling by Pakistan also impacted on Australian sales.
"We are facing very stiff competition from the Russians at the moment - they are $20 to $25 below us into a lot of Middle Eastern markets," said Steve Burt, managing director of Pentag Nidera, the Australian arm of privately owned Dutch firm Nidera. For the first nine months of the marketing year, shipments totalled 14.0 million tonnes, up 30 percent on the previous year, but the coming months are expected to show further slowdown, just as Australia is preparing for another bumper crop following a record harvest in 2009/10.
"Exports have been at unbelievable rate but they're start to taper off... I'm thinking 18 million tonnes to 19 million tops for this year," Burt added. Russia's re-entry in the global wheat market after a year long drought-induced absence, and new supplies from North American and West Europe harvests will make it difficult for Australia to maintain its pace of exports.
The government expects exports to surge 25 percent this year to 18.5 million tonnes, then rise to 20.1 million tonnes next year, beating a record of 19.2 million tonnes in 1996/97. But traders think those figures may be overly optimistic as they don't fully take into account Russia's return to the market.
"We just think things will start to slow off a bit as consumers look at what happens in the Black Sea and what the quality is and also getting access to US wheat as well," said Tom Puddy, head of CBH's grain marketing arm. Russia's withdrawal from the market left importers seeking supplies of lower quality grain elsewhere, allowing Australia to fill the gap with its feed wheat, but the world's third largest exporter lifted the ban on July 1.