Agro Perspectiva

AWB hikes wheat price hopes as Russia swelters

21.07.2010 12:14 "Agro Perspectiva" (Kyiv) — AWB, hiking its wheat price hopes, trumpeted the boost that Russia’s will hand Australia’s exports, even as Moscow merchants stood by a forecast of steady shipments. AWB, the Australia grain handler, lifted by up to 17% forecasts for returns from its wheat pools, the second upgrade in a month. The revisions, which put many growers on course to receive more than Aus$300 a tonne, reflected the «opportunities» for Australian wheat exports, with drought threatening to cut Russia’s grain production by more than 20%, and Kazakhstan’s by even more, while wet weather has plagued Ukraine’s crops. Dry weather has also affected output in the European Union, the world’s biggest wheat grower, with concerns now centring on Germany, the region’s second-ranked producer. «Consumers of Russian and higher protein German wheats will need to source grain from alternative suppliers,» Mitch Morison, AWB’s general manager commodities, said. «This translates as increased demand for Australian wheat into African and Middle Eastern markets.» The forecast follows an upgrade earlier this month by the US Department of Agriculture to its forecasts for Australia’s wheat exports by 1m tonnes to 15.5m tonnes in 2010–11, the best for five years. The USDA reduced its forecast of Russia’s wheat shipments by 2.5m tonnes to 15.0m tonnes, signalling a looser grip on global trade of a country whose competitively-priced shipments have played a big role in capping prices worldwide. However, Arkady Zlochevsky, president of industry lobby group the Russian Grain Union, said that Russia may still be able to export 20m tonnes of grain in 2010–11, despite cutting its forecast for the harvest from 85m tonnes to 81.5m tonnes. This estimate is lower than the government’s current 85m-tonne figure, but above the estimate of «below 75m tonnes» from SovEcon, the analysis group whose warnings late last month first rang global alarm bells over the harvest. «If [the] gross grain crop is lower, we may cut our exportable surplus forecast,» Mr Zlochevsky added. Russia, which last year harvested 97m tonnes of grain, is forecast to face further heat, with a "new heatwave schedule for the next 10 days, according to Paris and Kiev-based analysis group Agritel. Worries also remain for Canada, which is suffering a continuation of the wet conditions which cut sowings to their lowest in nearly 40 years. «Growing areas remain cooler with excess soil moisture and cool temperatures thought to be adding to the risk of disease there,» Terry Roggensack at Hightower Report said. «Sources indicate that warmer temperatures are needed, but they are not expected this week, at least not on a sustained basis.» In the US, one of the few major producers to have reported upgrades to its crop, «very hot weather… may have bought some last minute stress to the [hard red winter wheat] crop prior to harvest», he added. Nonetheless, international wheat prices retreated from early highs to close lower in Europe, and look set for a negative close in the US. In Europe, Paris wheat for November finished 2.6% lower at E168.00 a tonne, with London’s November contract shedding 1.7% at ¸126.75 a tonne. Chicago wheat for September was 1.7% lower at 5.77 ╪ a bushel in late deals. Besides profit-taking, investors also blamed the slide on a 3% slump in prices of fellow grain corn, weakened by weakening fears of adverse US weather ahead.