AWB today announced the first price range for the 2005/06 AWB National Pool, with an Estimated Pool Return (EPR) for the benchmark Australian Premium White wheat (APW) pay grade of between $170 – $180 per tonne (FOB GST exclusive), and an EPR for durum pay grade APDR of $210 - $220/t.
General Manager AWB International, Sarah Scales, said the opening estimate reflected the outlook for a challenging wheat market environment for the year ahead.
“International wheat prices are currently under pressure, with Chicago wheat futures having fallen about 30% from April last year. Driving this market has been a record global wheat crop in 2004/05, with huge crops in Europe and South America, and a growth in world wheat stocks – particularly in the major exporting nations,” Ms Scales said.
“At the moment, the new crop in the northern hemisphere is also looking good which is eroding the risk premium in the market, and at the same time, wheat demand remains relatively flat.
“Adding to the price pressure, has been the massive US corn crop, which at more than 300 million tonnes has seen US stocks double and has been a burdensome factor, not only for the corn market, but for wheat and other grains.
“The other factor influencing prices is the Australian currency, which has generally strengthened against the US dollar during the past twelve months,” Ms Scales said.
Ms Scales said it was only in the very early stages of the Pool life, and the size and quality of the northern hemisphere crops, particularly as they emerge from dormancy in the coming months, would remain a key for price direction.
Ms Scales said AWB issued its APW estimate early to enable growers to make important cropping and varietal decisions for the coming winter season. APW is AWB’s benchmark wheat pay grade, as it is the largest binning line and varietal pool in Australia.
AWB has also released its estimate for top grade durum.
“The premium for durum wheat relative to APW is higher than that for the 2004/05 Pool, given forecasts for reduced durum production in Europe this year, and reduced freight rates which particularly benefit exports to our durum markets,” Ms Scales said.
“Obviously this is only an estimate and is subject to changes in the marketplace, but it is made on our best forecasts on current market conditions,” said Ms Scales.
A full range of EPRs for each AWB National Pool pay grade will be released in the coming months.