The recovery in shipping rates is beginning to tell on grain export markets, Australia’s AWB has said as it joined rival CBH Group and the Canadian Wheat Board in raising estimates for farmers’ returns from barley.

The jump in sea freight cost, reflected in a near-doubling of the
Baltic Dry index since late September, has made Australian grain “more
competitive” to many destinations, the grain handler said.

AWB highlighted a “gradual” rise in prices of Black Sea exports, which
have been fiercely competitive during 2009-10, supported by a bumper
harvest and, in Ukraine, a sharply devalued currency.

The Baltic Dry index, which slumped by more than 94% between May and
December last year, has been revived both by higher demand for vessels
and port congestion, a problem which has dogged some of Australia’s
main grain docks.

Sellers’ strike

AWB’s comments came as it raised its forecast for pool returns by Aus$9
to Aus$184 a tonne for feed barley and to Aus$232 a tonne for malting
barley.

“Growers worldwide have been showing their displeasure with barley
prices by not selling, which is forcing values higher,” Mitch Morison,
AWB’s general manager commodities, said.

Separately, CBH, based its Western Australia, lifted its forecast for
returns from its barley pools by Aus$5-10 a tonne, citing “an improved
outlook… in both domestic and international markets”.

And the Canadian Wheat Board raised, by Can$7 to Can$152 a tonne, its
estimate of the price its pools will pay to famers, noting the knock-on
effect from America’s late corn harvest in supporting feed grain prices.

“Significant delays to the corn harvest may result in many acres left unharvested until the spring,” it added.

Quality threats

The CWB also lifted by up to Can$10 a tonne its forecast for wheat pool
returns, with the highest quality on course to achieve Can$271 a tonne,
citing the impact of adverse weather on Brazilian and Australian crops.

“Heavy rains have caused significant damage to the wheat crop in
Brazil, which has negatively affected the milling characteristics of
their crop,” the CWB said.

In Australia, “high temperatures forced early maturity and harvest in
Eastern Australia, while light rains in Western Australia caused some
harvest delays”, the board, the world’s biggest wheat seller, said.

“Quality uncertainty and harvest delays continue to support Australian wheat prices”.

Source: Agrimoney

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