Friday, February 13, 2009
Australia Wheat Exports Delayed on Port Congestion (Update1)
By Madelene Pearson
Feb. 12 (Bloomberg) -- Wheat exports from Australia, shipping its biggest crop in three years, may be delayed because of port congestion after the nation opened the market to multiple traders.
There are at least 19 vessels waiting to load grain from ports in Western Australia, the biggest exporting state, according to Bloomberg calculations. CBH Group, the state’s biggest grain handler, told customers it can’t take orders for February or March and temporarily halted April bookings, Colin Tutt, general manager of operations, said in an e-mail.
Farmers are rushing wheat to market after Australia scrapped its monopoly export system last year and opened the market to 22 traders including Cargill Inc. and Glencore International AG. The congestion may force customers to seek grain from other nations, and push up prices.
“The shipping stem is locked down,” Mike Chaseling deputy chairman of commodity management and grain trader Emerald Group Australia Pty. said by phone from Melbourne. “You can’t sell to anyone with any confidence in that period because you can’t be sure that you can get access to the port.”
Wheat futures for March delivery gained 2.50 cents, or 0.5 percent, to $5.4575 a bushel on the Chicago Board of Trade at 1:34 p.m. Sydney time. Australian milling wheat futures, up 6.8 percent this year, closed at A$298 a metric ton yesterday.
Unusual Congestion
The bulk of Australian wheat exports come from Western Australian ports, with Fremantle, Albany, Geraldton and Esperance shipping 62 percent of the nation’s grain exports in the year ended June 30, 2008, according to the Ports Australia Web site.
“It’s unusual to see all of the West Australian ports congested,” Alick Osborne, a director of the Australian Grain Exporters Association, said today by phone from Melbourne. “For the companies with ships awaiting there would be some exposure to demurrage.”
The Baltic Dry Index, a measure of commodity-shipping costs, has more than doubled this year. The index rose 4.1 percent to 2,055 points yesterday.
The congestion is because of limited capacity to move grain from farms to ports, a delayed harvest and the first year of deregulated wheat exports, the association’s Osborne said.
‘Teething Issue’
“There is a teething issue in terms of the traders in the market place managing the overall volume of sales to fit within the shipping capacity,” he said.
The Australian Grain Exporters Association’s members include Cargill, Louis Dreyfus & Cie SA, Glencore and Nobel Group Ltd.
Western Australia has already shipped 2.5 million tons from the most recent total state harvest of 12.3 million tons, CBH’s Tutt said.
“We are targeting to ship 3 million tons from now through to the end of April, including a record or near record monthly tonnage next month,” he said. “The whole industry is still finding its feet in this new marketing era.”
To contact the reporter on this story: Madelene Pearson in Melbourne on mpearson1@bloomberg.net
Last Updated: February 11, 2009 23:00 EST
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