Wheat in Australia's top grain growing state became
- briefly - the world's priciest, as expectations for the newly-started harvest took a
further hit, and underpinning forecasts of a sharp drop in exports.
A price of Aus$330.00 a tonne hit by Western Australia wheat
futures - equivalent to $340.00 a tonne, or $9.25 a bushel – meant the grain "is
now the most expensive in the world", Commonwealth Bank of Australia analyst
Luke Mathews said.
In fact, a rise in Minneapolis wheat, high protein, in early
deals on Wednesday to $9.30 a bushel ($341 a tonne) reaffirmed its place as
among the world's dearest on traded markets, ahead too of the E258.00 ($338) a tonne at which
Paris wheat for November was trading, or E256.60 a tonne for January delivery.
The rise in Western Australian wheat prices to some $40 a
tonne ahead of the value of east coast supplies came amid fresh market
ruminations over the competitiveness of supplies from different origins, as
Egypt's state grain authority flagged a lack of clarity over offers of Black
Ukraine grain traders have stockpiled 540,000 tonnes of
wheat for export, in addition to the 3m tonnes shipped already in 2012-13, for
fear of government trade curbs to protect domestic supplies, Kiev-based consultancy
However, prices of Western Australian wheat are being elevated
by ideas of further yield damage to dry weather, after key early-October period
which represented the last chance for crop revival passed without the rains
needed to boost grain fill.
"The strength in Western Australian wheat is related to
declining production prospects," Mr Mathews said.
"Minimal rainfall has been recorded through the Western Australian
wheatbelt in October, resulting in further reductions in yield potentials."
Some analysts "are now talking about a 5.5m-6.0m tonne Western
Australian wheat crop", well below the CBA forecast of 7m tonnes, and the 11.7m
tonnes achieved last year, he added.
A harvest at the lower levels being suggested would likely see
Western Australia surrender its title as the country's top wheat growing state,
with the New South Wales crop pegged by state officials at 6.88m tonnes.
And the weakening harvest prospects, and high prices, come
at a time of lowered expectations for Australia's wheat exports in the
newly-started 2012-13 season, with the US Department of Agriculture last week
slashing its estimate to 18.0m tonnes, a 28% drop year on year.
Separately, ideas of further damage to Western Australian
crops were supported by a 45,000-tonne downgrade, to 860,500 tonnes, by the Australian
Oilseeds Federation to its estimate for the state's canola harvest.
"While crops in the north have fared better than initially
anticipated, crops in the southern areas have had yield estimates reduced,"
thanks to "poor" rains, the federation said.
The group made a small upgrade, to 2.74m tonnes, in its
estimate of the total Australian crop, reflecting "well-needed rains" in many