GrainCorp sees Australian dollar lifting exports

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31 May 2010

Australian wheat exports are expected to get a lift from the weakness of the local dollar and exporters are already booking more ship berths at export terminals, grain handler GrainCorp Ltd has said. "In the last week to ten days, we have seen increased interest in export bookings," GrainCorp interim chief executive Ian Wilton told an analysts' briefing.
GrainCorp handles most of the wheat exported from eastern Australian ports.
Mr Wilton did not specify tonnages exported but said the recent significant depreciation of the Australian dollar would increase the international competitiveness of Australian grain.
The commodity-backed Australian dollar has fallen to around 83 US cents from around 92 cents at the start of May, caught up in the market turmoil ignited by Europe's debt problems.
CBH Group, the biggest grain exporter in the country's top wheat exporting state Western Australia, also said the weaker dollar had sparked increased interest for wheat from Australia, the world's fourth-largest shipper of the grain.
The extent to which increased interest translated into sales was still unclear.
"There's been a lot of tyre-kicking going on – there's a lot of people pricing cargoes but I don't think there is a lot of business being booked," CBH head of grain trading Tom Puddy said.
Rail freight is booked on a take-or-pay basis, putting pressure on exporters to win sales.
"There is more of a logistics play on the east coast where people have already pre-booked their rail freight and they're thinking let's firm up our FOB (free-on-board) slots with GrainCorp while the dollar is low in anticipation of sales," Mr Puddy said.
He said he wasn't aware of any significant sales since the Australian dollar's fall.
"What we usually find when the dollar falls is that everyone comes in and starts pricing wheat but buyers remain cautious in case the dollar drops further," Mr Puddy said.
"They're waiting for the dollar to stabilise and then they will start buying," he said.
Bulk wheat exports have struggled in the past month with total Australian bulk exports dropping to 802,000 tonnes in April from 1.25 million tonnes in March, port data shows.
Traders say that Australia's main customers in South-East Asia have their needs covered through to the end of July, making it difficult to achieve additional sales in the region.

Source: Reuters