Australia grain: container wheat export growth looms

Australian grain exporters expect sharp growth in containerised wheat exports, with a new set of rules to come into play at the end of next month. Barley exporter ABB Grain Ltd on Friday joined east coast exporter GrainCorp Ltd in stating that it saw major opportunities in exporting wheat in containers.
As laws change in reaction to AWB Ltd's Iraq kickbacks scandal. Other exporters and traders said containerised exports could lead to a cracking of Australia's monopoly bulk wheat export system.
"There's cracks in the system. Certainly the container business will expand and the reliance on the Wheat Board or the supposed single desk will decrease," said private exporter Peter Howard of OzEgrain and OzEpulse. ABB said that it saw containerised wheat exports doubling in coming years.
"I'm sure its right," Howard said. "There will be a big shift upwards." Howard has been exporting some containerised grain to Vietnam, but China is a bigger market for wheat. Exports are also going to the Middle East and other destinations. Total container shipments by OzEgrain have been around 250,000 tonnes a year of wheat, barley and pulses.
Whether the containerised trade would double would depend on the number of containers coming into Australia, trader Phil Holmes of Farmarco said. "Certainly the industry would be very much focused on developing that business as a leg into what's going to happen longer term with the single desk on bulk wheat," he said.
The government in May deregulated wheat exports in containers and bags by stripping monopoly bulk exporter AWB of a veto power on applications by other groups. This came in the wake of a scandal over kickbacks paid to the former Iraqi government of Saddam Hussein. The major change involves transfer of the bulk wheat export monopoly from AWB to a new grower-owned company by mid-2008.
AWB retains the monopoly until then. So far exports of wheat in containers by groups other than AWB have amounted to just 3-5 percent of total wheat exports. AWB subsidiary AWBI also exported 500,000 tonnes of wheat in containers in 2005/06. Figures from the government regulator the Wheat Export Authority show that in the shipping year to September 30 2006, Vietnam was the biggest market for Australian containerised wheat, taking 268,060 tonnes.
This was followed by China, which took 101,153 tonnes of total containerised exports of 890,043 tonnes. Other sizeable markets were Malaysia, 98,682 tonnes, Myanmar, 92,946 tonnes, Papua New Guinea, 51,052 tonnes, New Zealand, 48,537 tonnes, Taiwan, 46,543 tonnes and Thailand, 50,053 tonnes.
The export market in bagged wheat was minuscule, at a total of 11,690 tonnes, half going to neighbouring Indonesia. In contrast, as Australia's largest overall market for the year, Indonesia took 2.9 million tonnes of bulk wheat, followed by Egypt with 1.5 million tonnes, Japan with 1.1 million tonnes and Korea and Sudan with 1.0 million tonnes each.