Rain delays Australia wheat harvest, could dampen exports

10.11.2016

Rain is delaying the wheat harvest in parts of Australia, threatening to disrupt deliveries from the world's No.4 exporter of the grain to key markets such as India and Indonesia.

Expecting a near-record crop of close to 30 million tonnes, exporters had sold new-crop wheat for shipment in November and December.

But rains in the nation's eastern crop-belt, as well as frost in parts of the western growing region, have prevented farmers from gathering wheat on time.

"Growers ... are anxiously watching the skies, monitoring the weather apps on their mobile phones and praying that it turns dry," said Peter McMeekin, origination manager at grain trader Nidera Australia.

The harvest has been running three weeks behind schedule in Western Australia, the nation's largest wheat exporting state, according to analysts and traders. On the east coast, it is lagging by at least two weeks.

"There is a danger of late November and early December shipments getting delayed," said Ole Houe, an analyst with brokerage IKON Commodities in Sydney.

Australia is a leading wheat supplier to some of Asia's biggest markets, including the world's second-largest importer Indonesia. India, typically self-sufficient in wheat, has been relying heavily on Australia for supplies this year after local crops were hit by two years of adverse weather.

Frost damage across Western Australia, the country's largest wheat-producing state, has destroyed more than 15 percent of the total grain crop, Cooperative Bulk Handling Ltd (CBH) has said.

"A few parts of Australia ... have already commenced harvest. However, the real action is yet to begin in most cropping regions," said McMeekin at Nidera.

Australia is estimated to have ended the last marketing year in September with old-crop inventories of 5 to 7 million tonnes, but analysts and traders said supplies were tightening.

"We are supposed to have old crop, but when you go and find some, you don't get much," said Houe. "The spread between old-crop and new-crop has widened to $30 a tonne in Melbourne."

Old-crop Australian standard wheat was this week quoted at $260 a tonne for delivery in Melbourne.

But traders that have sold wheat for delivery in November and December said they were optimistic that any delays would not be significant.

"A few vessels here and there might get delayed," said one trader in Singapore. "But there should not be major delays."


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