Exports of wheat from Australia, the fourth largest exporter of the cereal, are at a slightly slower pace than last year as exporters struggle with a strong currency, lower prices and an oversupplied world market. CBH Group, the country's largest grain exporter, estimated on Monday that about 6.61 million tonnes had been shipped in the October-March period, down from 6.74 million tonnes for the same period last year.
Last month Commonwealth Bank of Australia estimated that 15.7 million tonnes could be exported during the October to September marketing year. But the bank added that its forecast might be optimistic given tough competition in Asian markets. Traders have also reported tight markets.
"There's stiff competition from Europe and Black Sea origins such as Russia coming into Asian markets normally supplied by Australia, as well as from Canada and the US Pacific Northwest," a Melbourne-based trader said. Australian premium white wheat is selling at around A$211 per tonne free-on-board (FOB), ex-Western Australia, about A$100 per tonne less than a year ago, due to ample world supplies.
A strong Australian dollar also has been blamed for poor competitiveness. The currency is trading around at around 93 US cents, compared with around 70-72 US cents a year ago. "A high Australian dollar and low prices have put a major curb on exports so things are ticking a long quite slowly at the moment," said David Ginns, a spokesman for GrainCorp Ltd, which handles most wheat exported from eastern Australia.
In 2009-10 Australia's wheat output totalled 21.66 million tonnes, up from 20.94 million tonnes in 2008-09 when 13.87 million tonnes were exported. The pace of sales would have been even slower if China had not re-entered the market, buying low protein Australian Standard Wheat (ASW) out of Western Australia, a traditional supplier of this quality wheat to China.
Exports to China for October-to-March period were at about 400,000 million tonnes, the highest since 2004-05, a trade source said. GrainCorp released a harvest report on Monday, saying that feedback bulk wheat exporters were receiving from their customers about quality has been positive. "The grain outturned from our bulk network that is elevated onto export vessels is meeting relevant standards and, most importantly, meeting export customer contract specifications," the report said.