Price fears likely to delay Australian wheat exports

Wheat exports from Australia, the world's third-largest shipper of the grain, may be delayed as some growers seek possible higher prices under new government marketing rules, Emerald Group Australia said.

Growers may not sell their crop to exporters until next year, potentially slowing overseas sales, Mike Chaseling, executive director of the Melbourne-based commodity management and grain trading company said in an interview. Exports traditionally start when harvesting begins in October, he said.

The federal government took control of the nation's wheat shipments in December after stripping AWB of its monopoly over wheat exports. Under the new laws, Agriculture Minister Peter McGauran can issue export licenses to rival exporters.

"Some will hold back because they are not sure what's happening and some will be thinking they will get a higher price,'' if licenses are granted, Chaseling said. "You can see a situation where wheat doesn't start to get out of the country until the last half of January.''

Wheat prices have soared 74 per cent in the past year, rising to a record this month as drought cut production from Australia to Europe and inventories fell. Wheat futures for December delivery fell 0.5 cent, or 0.1 per cent, to $6.82 a bushel on the Chicago Board of Trade in after-hours electronic trading.

Australia's government at the last harvest rejected 70 applications to export wheat and approved at least two after removing Melbourne-based AWB's power to block shipment requests from rivals. AWB will keep the right to be the nation's main exporter this harvest, under the legislation. Grain growers have until March to form a new body to replace the export functions of the company for subsequent harvests.

"The world needs both our barley and wheat, and in some cases quite desperately,'' Alick Osborne, commercial manager for the Australian unit of Louis Dreyfus, a closely held commodities trader, said yesterday at the Agriculture Australia conference in Melbourne. "Australia should be getting its wheat to customers as quickly as we can.''

The nation may produce 22.5 million tonnes of wheat this year, more than double last year's drought-reduced crop, the government's forecaster said in June.

Crops in parts of northern New South Wales and southern Queensland states may fail without rain in the next two-to-three weeks, Rabobank Groep said today. Western Australia state this week cut its wheat forecast 3.4 per cent on dry weather, while the South Australian government raised its wheat crop estimate 4 per cent.

"The way it's looking at the moment, unless we get some decisive action by the government we could have some big disruptions to out export programs,'' Richard Koch, managing director of Perth-based analyst ProFarmer Australia said.

Growers may also hold onto their crops on expectations the nation's export market may be opened to full-competition, Koch said in an interview in Melbourne.

"That would create a great deal of competition and should result in higher prices,'' he said.