Australia Latest

07/12/10 -- ABARE surprised the market this morning by raising it's Australian wheat production estimate for this season to a record 26.8 MMT. They've tended to be on the high side of trade estimates all year, but this latest projection appears to have been met with bemusement by the rest of the trade who have been marking output (as well as obviously quality) down not up.

Whilst acknowledging that wheat quality has taken a hit recently due to heavy rains in the east, they didn't specifically quantify the magnitude of potential downgrades.

Today's estimate os almost 5 MMT higher than last season's output of 21.9 MMT, and comes on the back of record yields in most of the eastern grains belt, they say.

Again this is very reminiscent of the UK's wheat crop of 2008, which was still being harvested in northern regions at 26% moisture well into late October after a very wet summer and autumn. Despite trade production downgrades we subsequently brought in a record crop in excess of 17.2 MMT, although milling grade wheat was in short supply.

Despite today's news the overnight Globex market sees wheat continue to march higher, with the most active March contract currently up 12c.

You can read the full ABARE report here.