MELBOURNE, AUSTRALIA — AWB’s 2010-11 season estimated pool returns (EPRs) for wheat have been revised downward following a sustained drop in world wheat prices, the AWB said on March 11.

AWB’s estimated pool return for benchmark APW wheat in the eastern pool is down A$11 a tonne to A$362 a tonne and FED1 is down A$11 to A$277 a tonne. In AWB’s western pool APW wheat is down A$4 at A$380 a tonne while ANW1 noodle wheat is down A$12 to A$480 a tonne (FOB, excl GST).

AWB General Manager Commodities Mitch Morison said the world wheat market would remain volatile during the northern hemisphere spring, however the market had trended lower in recent weeks and was now well down from its high points in January and February.

“There is a range of factors contributing to the softer market, including concern over the global economic recovery, a lack of fresh bullish news to drive markets and the unrest in the Middle East; now this week we have seen the effects of fund managers liquidating long wheat positions,” he said.

“Last night the U.S. Department of Agriculture (USDA) released their updated global supply and demand figures, which showed wheat usage numbers were revised downwards and overall world wheat stocks revised upwards by 4 million tonnes, with U.S. ending corn stocks unchanged. Overall the report provided further negative direction to markets, with U.S. CBOT wheat futures opening and closing almost $7 weaker.

“With the northern hemisphere winter ending the market is very focused on new crop conditions and will remain so as the northern spring develops. China is reporting a significant drought and parts of the US wheat belt have also been very dry, however recent rains have improved their situation. Crops in the E.U., Russia and Ukraine are thought to have come through winter very well, however with the northern harvest still months away the ‘weather market’ will be dominant until yield prospects firm.

“Notwithstanding the USDA numbers the global wheat balance is fairly tight and will remain so until July when the next northern harvest gets going, which means significant market volatility will continue. It will create opportunities that our pool management team will work to take advantage of for pool participants.

“Over recent weeks premiums for soft wheat grades such as ASW have been under pressure. With production in eastern Australia higher than early estimates but protein levels lower, working this grain into regular Middle Eastern markets presents quite a challenge for Australian exporters. New crop French soft wheat is priced well into many markets, making it difficult to achieve significant premiums for Australian soft wheats.

“Noodle premiums in Western Australia continue to come under pressure, with now adequate noodle supplies available following revisions to customer blends. By contrast the shortage in WA of milling wheat that meets customer requirements is supporting our EPRs for grades other than noodle.”