AWB Pools Despite a strong lift in US futures and a drop
in the dollar, AWB have left pool estimates unchanged
this week. The week on week comparison below shows
the A$ value of US futures lifted by a strong $7.24/t over
the last week, since the last AWB update to pool
estimates.
12-Dec 19-Dec Change
March Futures 307.5 319.75 12.25
Aust Dollar 74.98 74.39 -0.59
A$ Dec Futures $150.51 $157.75 $7.24
AWB APW MV
AWB Pool ESR $146.90 $146.90 $0.00
Basis -$3.61 -$10.85 -$7.24
AWB actually claim that commodity markets and
currency remained steady over the week. That is actually not true as the above numbers show. In fact it was the
strongest weekly rally in wheat futures since the last week
of September, and while the dollar has been as high as
75.77 US cents last week, it is now back close to 74 US
cents, and down nearly two thirds of a cent week on week.
However, it is not surprising that AWB did not follow the
market this week. There is no guarantee that the gains of
last week will be sustained, and US futures have pushed
higher relative to international export prices, particularly
with another round of subsidised exports from the EU.
If the gains are sustained, or built upon, we should see
AWB pool estimates go up eventually. However we have
to remember that AWB are not able to extract the same
premiums from Iraq in our post harvest period since that
market has been opened up and more of the business has
gone to the US. As we have said before, prices are lower
and tonnages we move into that market are down now that
the trade is open. This will limit AWB’s ability to repeat
its performance relative to US futures that we have seen in
recent years, and will limit their ability to add to pool
returns during 2006.
2004/05 AWB Pool Returns While new season pool
returns are unchanged, AWB have lowered estimates for
the old season pool by $1/t for milling grades, and lifted
returns for feed wheat by $3/t.
They make no comment on the reasons, but the loss of
sales into Iraq to the US must have an impact on last
year’s pool results. It should not affect this year’s
estimates as much because they will already have factored
in lower tonnages and lower prices.
Wheat Outlook Watch wheat. There is cold weather in
China this week that could hurt their winter wheat crop. If
they lose tonnage and replace it with imports in 2006 it
will lift US wheat futures. Likewise the US crop has
issues relative to the good crop condition seen 12 months
ago. Basically we don’t need to see a lot of tonnage come
off a range of important regions, and the wheat outlook
changes dramatically. Let the speculators get hold of it
and we could see a nice price rally, particularly as we get
to the business end of the northern hemisphere growing
season next March – May.
in the dollar, AWB have left pool estimates unchanged
this week. The week on week comparison below shows
the A$ value of US futures lifted by a strong $7.24/t over
the last week, since the last AWB update to pool
estimates.
12-Dec 19-Dec Change
March Futures 307.5 319.75 12.25
Aust Dollar 74.98 74.39 -0.59
A$ Dec Futures $150.51 $157.75 $7.24
AWB APW MV
AWB Pool ESR $146.90 $146.90 $0.00
Basis -$3.61 -$10.85 -$7.24
AWB actually claim that commodity markets and
currency remained steady over the week. That is actually not true as the above numbers show. In fact it was the
strongest weekly rally in wheat futures since the last week
of September, and while the dollar has been as high as
75.77 US cents last week, it is now back close to 74 US
cents, and down nearly two thirds of a cent week on week.
However, it is not surprising that AWB did not follow the
market this week. There is no guarantee that the gains of
last week will be sustained, and US futures have pushed
higher relative to international export prices, particularly
with another round of subsidised exports from the EU.
If the gains are sustained, or built upon, we should see
AWB pool estimates go up eventually. However we have
to remember that AWB are not able to extract the same
premiums from Iraq in our post harvest period since that
market has been opened up and more of the business has
gone to the US. As we have said before, prices are lower
and tonnages we move into that market are down now that
the trade is open. This will limit AWB’s ability to repeat
its performance relative to US futures that we have seen in
recent years, and will limit their ability to add to pool
returns during 2006.
2004/05 AWB Pool Returns While new season pool
returns are unchanged, AWB have lowered estimates for
the old season pool by $1/t for milling grades, and lifted
returns for feed wheat by $3/t.
They make no comment on the reasons, but the loss of
sales into Iraq to the US must have an impact on last
year’s pool results. It should not affect this year’s
estimates as much because they will already have factored
in lower tonnages and lower prices.
Wheat Outlook Watch wheat. There is cold weather in
China this week that could hurt their winter wheat crop. If
they lose tonnage and replace it with imports in 2006 it
will lift US wheat futures. Likewise the US crop has
issues relative to the good crop condition seen 12 months
ago. Basically we don’t need to see a lot of tonnage come
off a range of important regions, and the wheat outlook
changes dramatically. Let the speculators get hold of it
and we could see a nice price rally, particularly as we get
to the business end of the northern hemisphere growing
season next March – May.
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