Wednesday, September 15, 2010

Commodity News - Dow Jones Newswires

 Australia 2010-11 Wheat Crop Forecast Raised To 25.1 Million Tons
Australia has revised up its official winter and summer crop production forecasts sharply, following average to above-average rainfall in the Eastern Australia province in recent months. Including substantially higher production of wheat, the bigger crop could raise the amount available for exports in the coming year.
Combined with sharply higher global grain prices, this is expected to add billions of dollars to the country's export revenue, and should ensure a bumper year for Eastern Australian growers and suppliers of rural merchandise and services such as fertilizers and export logistics.
Australia's wheat production in the crop year ending March 31 will jump to 25.1 million metric tons, a 14% rise from a June estimate and a 16% jump from the 21.7 million tons produced in 2009-10, the Australian Bureau of Agricultural & Resource Economics said in a quarterly crop report Tuesday. That represents a 36% jump from a five-year annual average. 

China Downplays Grain Imports, But Effects Could Be Seismic

Top Chinese economic officials have in recent weeks issued a string of assurances about China's grain self-sufficiency, downplaying a surge in grain imports this year that could portend a potentially seismic shift in the global grain trade.
Because of China's economic size, such a change, even by small degrees, could mean millions of tons of grains diverted to the Asian giant, setting off far-reaching changes in global shipping and grain production trends.
The latest assurances, reinforcing those from other senior government officials, came Tuesday from Zhang Xiaogang, deputy director of the National Development and Reform Commission, the country's top economic planning agency.
"Apart from soybeans, imports of wheat, corn and rice, among other grains, have been small, not even 1% of the country's domestic output," the state-run Xinhua news agency quoted Zhang as saying at the World Economic Forum "Summer Davos" forum in Tianjin.
"Domestic grain prices basically won't be affected by the global market," he said.
In fact, China's grain imports have risen sharply this year.
Official data for the first seven months showed wheat imports at 1 million metric tons, double the level seen in the same period a year earlier. August data won't be released until next week. Over the same period, corn imports have risen nearly 62 times to 281,971 tons. Rice is up 45%.
Additionally, customs data understate import levels by including only out-of-quota shipment volumes, analysts say. So far this year, corn imports from the U.S. have in fact exceeded 1 million tons.
Despite the potential impact of the rise in import numbers, however, the trend may not be immediately visible in prices.
China's grain reserves are well above the global safety standard of 18%, "adding strength to (China's) ability to control grain prices," Zhang said.
The government uses its grain reserves, the world's largest, to buffer domestic grain market volatility, and has so far succeeded in staving off a series of corn, wheat and other food price rallies this year.
China doesn't officially disclose its grain reserve levels, but the stockpiles are estimated at 45% of output levels.
Abare's wheat forecast is above those of other analysts, which have been mostly estimated the crop in a 22 million to 23 million tons range, though Profarmer Australia last week predicted a crop of 24 million tons.
Australia is a major global supplier of wheat with a domestic consumption of only around 7 million tons, leaving the rest of the produce usually available for exports.
Abare said the expected increase in wheat production will underpin higher exports in the marketing year that begins Oct. 1. Exports are expected to rise 21% on year to 18.4 million tons, from an estimated 15.2 million tons this marketing year and an actual 14.7 million tons in 2008-09.
Total output of winter crops this year now is estimated at 40.7 million tons, surging 16% from the 35.2 million tons produced last year.
"Recent rains have added to one of the best starts to a winter cropping season in several years, and significantly boosted the yield potential of the winter crop leading into the crucial spring phase before harvest," Abare Deputy Executive Director Paul Morris said in a statement.
"New South Wales has the prospect of achieving some of the highest yields in ten years and, combined with a high area cropped, is expected to drive the increase in national production," Morris said.
An upgrade to the production forecast for eastern states is expected to more than offset a downward revision for Western Australia, where winter crop production is now expected to be the lowest since the 2006-07 drought, Abare said.
"If we're talking 25.1" million tons of wheat, that would be the third biggest crop on record, said Russell Amery, President of the grains section of lobby group Victorian Farmers' Federation. 
 India Likely To Aim For Record Wheat Output - Official
India will likely aim for a record wheat output of 82 million metric tons this crop year through June 2011, helped by good rainfall and water reserves climbing above the 10-year average, a senior farm ministry official said Tuesday.
India--the world's second-largest wheat grower--typically sets an output target each year, which shapes its policies such as supply of cheap seeds, fertilizers and the government's procurement price for the grain.
Late rains helped India reap a record harvest of 80.71 million tons in the crop year through June 2010, but this created storage problems. The situation may worsen with increased crop yields in 2010-11.
The government aims to deal with the problem by raising warehouse capacity in collaboration with private companies, but it will take at least three-four years to be implemented fully.
A rise in output may encourage the government to lift a three-year ban on wheat exports when it reviews the decision later in 2010.
Higher production may also ease food inflation, which had accelerated to the double-digit level after a drought last year, and help the government implement a proposed law to supply grains at a fraction of cost to the poor.
"Our main focus this rabi (winter) season would be to increase yields. We will supply adequate seeds and fertilizers before the planting begins [in October-November]," the ministry official, who didn't want to be identified, told Dow Jones Newswires.
The government will encourage farmers to use high-yielding seeds and follow good farm practices such as timely sowing and fertilizer usage to raise crop productivity, the official said.
Last week, Agriculture Secretary P.K. Basu said water levels in India's reservoirs were 136% more than a year before and 102% of the 10-year average. Higher water levels at reservoirs will likely help winter crops.
The monsoon season, which brings most of India's rains, usually runs from June to September and winter crops are mostly dependent on water reserves. Good showers this year have improved soil moisture in the country's farmlands, which were parched following the worst drought in nearly four decades in 2009.
  Dow Jones & Company, Inc.

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