APW prices see little impact from Australia's record wheat crop forecast

The Australian Premium White wheat price remained firm Tuesday despite an official forecast of record production for 2016-17 (October-September) amid limited spot offers, localized flooding concerns and a surge in Chicago wheat futures, traders said Wednesday.
The Australian Bureau of Agricultural and Resource Economics and Sciences or ABARES Monday forecast Australian wheat production in 2016-17 at an all-time record high of 35.1 million mt, up 2 million-3 million mt from earlier estimates and up a sharp 45.4% from realized output the year before.
The yield was last higher five years ago at 29.91 million mt in 2011-12, according to ABARES, which has been tracking yields since 1972-73.
Despite ABARES raising its forecast, offers remained steady at mostly above $210/mt FOB Western Australia, traders said Wednesday.
"The market has already factored in a record harvest in Australia and this forecast is not below industry expectations," one trader said.
S&P Global Platts assessed APW at $210/mt FOB WA Tuesday for cargoes loading in 60-90 days, up $2/mt day on day, amid firm selling indications and limited sellers for April and May shipments.
APW wheat is currently being offered at $213-$215/mt FOB WA for April-June shipments, up $3/mt or more from last Friday.
Market participants attributed the rise to the lag in impact from an uptick in US Chicago wheat futures late last week.
The front month Chicago wheat futures spiked by more than 10 cents/bushel last Thursday, or more than $3/mt, to a seven-month high, after the release of a US Department of Agriculture report pointing to lower global wheat supply.
"The strong Australian dollar, which was at one point Tuesday hit $0.768, further led non-cash strapped growers to hold their wheat," one trader said.
Australia's largest grain handler CBH confirmed via email Wednesday that heavy rain and localized flooding over the weekend had impacted its road, immediate shipping logistics and a grain receival site in Western Australia, the country's largest wheat exporting state.
"One of our receival sites received significant flooding. With waters having now receded, we are currently working with insurers to ascertain the extent of any damage to both infrastructure and grain," CBH Logistic Manager Ben Raisbeck said in the emailed statement.
"Over the next few days we will be outloading grain held on site which will help us understand how much grain may have been lost. We also have a significant stockpile of grain in storage at port, which has kept the most immediate shipping programs underway," he added.
"There may be slight delays to the next wave of shipping schedules, however we are continuing to move grain from upcountry sites via both the road and rail networks which remain available."
Raisbeck added: "Albany zone has endured significant rail damage which is expected to take some time to repair," with the exact timeframe not yet clear.
Flooding also caused significant damage to roads in the Esperance zone, although operations in the central and eastern part of that zone via road were possible, CBH said.
Kwinana port operations have also been impacted, but CBH said it expected normal operations to resume later in the week.
"The grain in storage and the infrastructure is covered under insurance, so any impact of this extraordinary weather event will not be passed on to growers. Our main concern is the impact the floods have had on both road and rail networks," Raisbeck said.

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