PRINTABLE VERSION   EMAIL TO A FRIEND   RSS FEEDS 17:28 UK, 7th Dec 2010, by Agrimoney.com
Wheat price soars above $500 a tonne

If you thought bread makers had been left in a bind by the rise in wheat prices, spare some sympathy for noodle manufacturers.

The price of noodle wheat has doubled over the past year to more than $500 a tonne. And that is just what AWB, the Australian grain handler, estimates it will give farmers for supplies, with customers likely to pay a cut on top.

The Aus$536 ($530) a tonne, equivalent to more than $14.40 a bushel, that AWB estimated that growers using its top noodle wheat pool in 2010-11 will receive is up Aus$52 in a week, and represents a premium of Aus$160 a tonne over farmers' estimated returns from selling benchmark Australia premium white 2 wheat through the grain handler.

Last year, the premium was Aus$15 a tonne.

"This looks like another sign of the prices that are being given for quality," an Australian grains analyst told Agrimoney.com.

"This premium does sound extreme. But if you want to make a certain kind of noodle, you have got not choice."

Lowest for decades

The particular strength of noodle wheat reflects its status as a Western Australian crop meaning production has been badly hit by the drought which has sent grains production plummeting in what is normally Australia's top cereals state.

Official Australian forecasters on Tuesday slashed to 3.6m tonnes, from 6.1m tonnes, their forecast for the state's total wheat harvest, pegging it at a yield of 0.74 tonnes a hectare, the lowest since 196970.

With noodle wheat usually accounting for some 13-14% of total wheat output, that implies production of some 500,000 tonnes, well below the 800,000 tonnes that the key noodle markets of Japan and South Korea typically require each year.

'Sending a signal' 

AWB's price rise puts it head to head with CBH Group, which has historically handled most of the Western Australian crop, and last year paid out as little as Aus$253 a tonne for top noodle wheat, depending on the sales method chosen.

Indeed, it may go some way to ensuring that at least next season the makers of the likes of udon noodles pay less for their supplies

"Part of what these pool price estimates are about is sending a signal for next year," the analyst said.

"To encourage farmers to grow the kind of wheat handlers think they can sell."

It looks like AWB believes it will find a ready market in noodle wheat in 2011-12 too.

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