AWB has raised its forecast wheat pool returns for the 2010/11 season by up to $44 a tonne, as the world wheat market responds to increasing concerns about drought-induced supply shortages in Russia, Kazakhstan and northern Europe, along with the Russian government banning wheat exports for several months.

AWB’s estimated pool return (EPR) for benchmark grade APW wheat in the Western Pool is now $339 a tonne, up $44, ANW1 noodle wheat is now $354 a tonne, up $44, and APW wheat in the Eastern Pool is up $43, to a new EPR of $333 a tonne (FOB, excl GST).

AWB General Manager Commodities, Mitch Morison, said the jump in world wheat prices was all about supply and the uncertainty of what production will be available, plus the potential effect of intervention by governments to manage local supplies.

“The drought affecting Russia is widely known and the Russian Government has placed a ban on exports until December,” Mr Morison said.

“The hot, dry weather is affecting a much wider area than Russia however, with yields affected in Kazakhstan, Ukraine, Germany, the United Kingdom, Poland, Hungary and northern France.

“This means a lot of uncertainty, which pushes prices up as buyers move to secure their supply lines.

“In addition to cash markets for physical wheat, futures markets have been particularly volatile, as fund managers balance their positions and respond to announcements from various governments in the region about what policies may be applied.

“To illustrate this point, following a series of upward moves earlier in the week, on Friday last week Paris wheat futures (MATIF) dropped sharply lower, after it was announced Kazakhstan and Ukraine don’t plan to suspend exports and Russia confirmed that despite their export ban, all existing contracts would be honoured.

“What this all means is that the world is now watching supply from other regions more closely: the US crop, which is part way through harvest, the Canadian crop, which got off to a bad start from excessive rain, Argentina, which has a much later season and is many months from harvest.

“For Australia it is known that while the season is strong in the east, Western Australia needs substantial rainfall, so this situation is also supporting prices and buyers will remain nervous until the picture for world supplies becomes clearer,” Mr Morison said.
 
AWB media contact: Ian Desborough 03 9209 2335 or 0418 853 881

Top of page

View all Media Releases