Wheat shipments from Australia, the world’s third-biggest exporter this year, will probably advance 13 percent in 2013-2014 as higher profits encourage farmers to boost planting, CBH Group said.
Sales may rise to as high as 18 million metric tons in the year beginning November from 16 million tons this year, said Tom Puddy, head of marketing at the country’s largest grain handler, which ships about 6 million tons of wheat a year. Production will expand to 24 million tons from 21.5 million tons, he said.
Rising supplies from Australia may intensify competition among shippers, with the United Nations predicting world output in 2013 to be the second-highest on record, boosted by a recovery in yields in parts of Europe including Russia. Snow is boosting the harvest outlook in the U.S., while exports from India will surge to a record after government approved more shipments. Wheat, down this year, was the best performer on the Standard and Poor’s GSCI index of 24 commodities in 2012.
“Farmers are looking at the relative value globally,” Puddy said in an interview in Singapore yesterday. “Wheat prices came off over the past month, but the farmers’ returns are still reasonable.”
Futures traded at $7.0425 a bushel on the Chicago Board of Trade at 5:38 p.m. Singapore time, down 26 percent from a four-year high in July. Prices climbed 19 percent in 2012, when drought from the U.S. to Europe cut supplies.
“Russia will be aggressive to regain market share in the second half of the year,” Puddy said. “We’re seeing some discounted values after June,” he said, referring to export prices, reflecting market expectations of increasing supply.
The Australian government has forecast exports to drop to 20.8 million tons in the year beginning July from 21.9 million tons, as less grain will be drawn from stockpiles. The nation’s fiscal year starts July 1 and wheat planting from about April.
Puddy uses the marketing year that begins when the initial harvests are ready for export. Total supply will be little changed at 28 million tons in 2013-2014, including a stockpile of 4 million tons carried over from the previous harvest and output of 24 million tons, he said.
Farmers in Australia may boost plantings by 3.8 percent to 13.8 million hectares (34.1 million acres), the Australian Bureau of Agricultural and Resource Economics and Sciences said March 5. The country is the largest shipper after the U.S. and the European Union, U.S. Department of Agriculture data show.
“Export expansion from Australia is a bearish factor for wheat in the medium and long term,” Makiko Tsugata, an analyst at Market Risk Advisory Co., said in an e-mail today.
World output may total 690 million tons in the 2013 growing season, compared with 661.8 million tons in 2012, the UN’s Food & Agriculture Organization said March 7. The harvest would be second only to the 2011 record.
Russia may produce 53 million tons, up 39 percent from 2012, the FAO said. Exports from India may reach 10 million tons in the year from April 1, according to the New Delhi-based National Centre for Agricultural Economics and Policy Research.