Australian officials flagged the risk posed by India to
wheat prices even as they came in with a lowball forecast for world inventories
of the crop, and hiked forecasts for values of the range of grains and
The Abares commodities bureau hiked to $350 a tonne, from $260
a tonne, its estimate for the average price of hard red winter wheat as offered
for export in US Gulf of Mexico ports.
"This forecast reflects an expected fall in the supply of
wheat in major exporting countries, particularly in the Black Sea region, and
expected strong demand for feed wheat in the US and China," the group said.
The upgraded price is equivalent to some $9.50 a bushel,
well ahead of the value that Kansas hard red winter wheat futures were pricing
in on Tuesday, of $9.05 a bushel for December delivery and a small premium, to
$9.19 a bushel, for holding on until March.
Wheat futures on Tuesday managed a small rebound from the
sharp drop in the last session and, indeed, the grain proved among the stronger
agricultural commodities in early deals, helped by data showing US farmers
slightly behind the pace with autumn sowings of the crop.
However, Abares highlighted as a "downside risk" to its
price forecast "the potential for a significant volume of wheat to be exported
from India", after the country's government in September 2011 lifted a
four-year old ban on shipments, and has continued to signal a willingness to
Last week, India's food minister, KV Thomas, countered talk
that the weak monsoon may provoke fresh import curbs by saying the government
was "working on a mechanism to have a stable export-import policy on select
farm commodities such as rice, wheat and sugar".
Abares price forecasts 2012-13, change on previous and (yr on yr)
Hard red winter wheat, US Gulf FOB: $350 a tonne, +$90, (+17.1%)
Australian APW wheat, pool return: Aus$343 a tonne, +Aus$93, (+32%)
Corn, US Gulf FOB: $318 a tonne, +$74, (+13.2%)
Feed barley, Rouen FOB: $292 a tonne, +$44, (+8.1%)
Australian malting barley: Aus$256 a tonne, +Aus$61 a tonne, (+27%)
Soybeans, Rotterdam, CIF: $655 a tonne, +$140 a tonne, (+23%)
Canola, Hamburg, CIF: $610 a tonne. +$30 a tonne, (-1.5%)
Abares said that while India "is not typically a major
exporter of wheat", its shipments "are forecast to reach around 5m tonnes in
2012–13", helped by a succession of strong harvests.
Exports at this level would approach the 5.7m-tonne record
set nine years ago, besides potentially exceeding the US Department of
Agriculture figure of 4.5m tonnes.
Abares flagged the rise in India's state-held
stocks of the grain to 47.5m tonnes as of the start of last month, more than
twice the government target.
Feed wheat use
The Abares price estimates factored in forecasts for world
stocks at the close of 2012-13 of 169m tonnes, well below the 176.7m tonnes
expected by the US Department of Agriculture and a forecast of 180m tonnes by the
International Grains Council.
The Abares data include higher estimates for consumption of
wheat, particularly in feed "as a result of forecast higher prices of
substitute feed grains such as corn".
Abares world wheat data, change on year and (on USDA estimate)
Beginning stocks: 197m tonnes, +4m tonnes, (-1.6m tonnes)
Output: 665m tonnes, -31m tonnes, (+6.3m tonnes)
Feed consumption: 145m tonnes, +1m tonnes, (+12.9m tonnes)
Total consumption: 693m tonnes, +2m tonnes, (+12.3m tonnes)
Carryout stocks: 169m tonnes, -28m tonnes, (-7.7m tonnes)
Consumption of feed wheat in China, which the USDA sees
staying stable, "is expected to increase in line with a forecast increase in
livestock production in that country", Abares said, foreseeing a notable
increase in the US too.
The bureau also raised its forecast for the average US corn price,
as at Gulf ports, in 2012-13 by $74 a tonne to $318 a tonne, and of feed barley,
as measured in the French port of Rouen, by $44 a tonne to $292 a tonne.
"These forecast price increases are driven mainly by severe
drought conditions in the US and dry seasonal conditions in the Black Sea
region, leading to a reduction in coarse grains supply in 2012–13," Abares
In oilseeds, the bureau hiked its forecast for average soybean
prices in the Dutch port of Rotterdam by $140 a tonne to $655 a tonne.
"This forecast increase reflects an expected decline in US
soybean production and considerably lower carryover stocks caused by a fall in
soybean production in 2011–12."