AWB 2010-11 wheat pool forecasts mixed

by World Grain Staff
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MELBOURNE, AUSTRALIA — AWB’s forecast pool returns for 2010-11 season wheat are higher once again for noodle wheat this week, along with high protein wheat in eastern Australia, although most other grades are softer after a dramatic decline in world futures markets at the end of last week, AWB said on Nov. 16.

AWB’s estimated pool return (EPR) for ANW1 noodle wheat is up A$17 to A$462 a tonne, while benchmark grade APW wheat in the Western Pool is down A$8 to A$332 a tonne and APW wheat in the Eastern Pool is down A$8 to A$316 a tonne (FOB, excl GST).

AWB’s General Manager Commodities Mitch Morison said a slightly softer Australian dollar was beneficial, however it could not fully offset the decline in wheat futures and other commodities over uncertainty about whether Chinese monetary authorities would tighten interest rates.

“Pressure has mounted on China to widen its currency trading bands and rumors grew rapidly last week to the point that markets concluded China will act on the issue, in the process generating sufficient nervousness and speculation for a market sell-off. The futures drop started in China on cotton, before moving to corn and then onto other commodities on world exchanges,” Morison said. “In the absence of any fundamental grain market news to hold the market up, international wheat values dropped $24 a tonne.

“Fortunately Australian wheat values have been appreciating and didn’t suffer as much, so when combined with the softer Australian currency and our own hedging program, our EPRs have shown less movement.

“Noodle wheat, as we have said before, is pricing independently to milling wheat and speculative demand for this specific product out of Western Australia continues to drive noodle prices upwards. AWB is closely watching values and working with customers to ensure pool participants receive optimal outcomes, without the spot risk of selling at one time.

“In eastern Australia our spreads for high protein wheat have also increased, as a result of lower availability after yet another major rain event in recent days that will turn more milling wheat into stockfeed.

“Normally Australia would not have much feed wheat available, but the situation is different this year and we are set to capitalize on both our experience as a major exporter and our large customer base to displace feed grains from other countries.”
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