Australian Farmers Holding Onto Their Wheat

Wheat farmers across Australia are holding back their grain deliveries to AWB Ltd - and to other exporters - in the first season since AWB lost its status as Australia's monopoly wheat exporter.

The Australian Financial Review reports that farmers had committed only about 5pc or 900,000 tonnes of an expected 20 million tonne national wheat harvest so far to AWB.

AWB chief executive Gordon Davis said uncertainty created by the deregulation of the wheat export markets meant farmers were stockpiling their wheat, while they sorted out the best available price.

However, he said farmers could yet deliver more of their crop to the company.

Even WA's big CBH Group, which is in the box seat to receive the wheat in that state, is concerned, according to a report in Farm Weekly, WA.

CBH warns that the WA grain receival system is in danger of breaking down as growers delay selling grain while they shop around for the best price in the new deregulated market.

A bulk carrier fleet anchored off Geraldton, WA, for instance, remains idle this week and the CBH is concerned that unless some grain is quickly sold and moved out, the system could collapse.

CBH Group executive logistics manager Tim Collins has told Farm Weekly that farmers who have already harvested in the northern wheatbelt are waiting to get the best price in the deregulated wheat export market.

Grain from this season's harvest is starting to pour into Geraldton zone silos and there are fears the problem could spread to the WA's other grain ports, Kwinana, Albany and Esperance.

A ship arrived at Geraldton last week and another five are due this week.

The ships have a total 167,000 tonnes capacity.

Growers could be billed demurrage costs because some of the ships have been ordered by CBH subsidiaries Grain Pool and its wheat marketing arm AgraCorp.

The only consolation is that daily shipping rates have plummeted causing Panamax-size ships that cost $60,000-$70,000 daily six months ago to now charge $10,000-$15,000.

Mr Collins said while he is concerned about the cost of unused ships his main concern is how the storage system would cope if the grain isn't moved quickly.

Mr Collins said unless some of the grain is nominated quickly, the receival system could clog up and crops could have to stay in their paddocks.

"CBH has 20 million tonnes of storage capacity if you have one grade, but when you have 60-65 segregations you lose your capacity very quickly," he said.

"The system is quite literally a pipeline and so it is important that pipeline is kept open.

"If these ships don't get grain we have a significant problem.

"We don't need all grain nominated, but about 20pc-30pc."

About 1mt has been harvested in the Geraldton zone so far this harvest.

Mr Collins said the cooler weather had made matters worse because grain had not been received quickly.