Cargill raised concerns over Australia's grain logistics even as data showed the country's wheat inventories continuing their rapid, export-fuelled decline, falling year-on-year for the first time in nearly two years.

Melbourne-based AWB, the Cargill-owned crop handler, said that while it was maintained a "solid" pace in marketing grain, its ability to execute deals efficiently was "under pressure" in some regions thanks to transportation hiccups.

"One of the key challenges facing the industry as a whole is the ability to accumulate export cargos in a timely and cost-effective manner, especially with congestion in Western Australia and the closure of Outer Harbor in South Australia," AWB spokesman Richard Williams said.

AWB was "working hard to minimise disruptions" to import buyers of Australian crops, besides to its grain pools, which sell on behalf of hundreds of farmers who contribute supplies.

Falling inventories

The comments came as official data showed Australian wheat inventories continuing to decline, falling 2.38m tonnes to 9.08m tonnes in August.

The drop left stocks below the year-ago figure for the first time since November 2010, since when they have been replenished by two bumper harvests, and sharpened ideas that Australian inventories are on track for a 2011-12 fall which had been little-forecast at the start of the season, last October.

The drop has been fuelled by soaring exports, which Commonwealth Bank of Australia analyst Luke Mathews said on Monday were set to reach 24-24.5m tonnes over 2011-12, fuelled by the clamour in Asia for alternative feed grains to high-priced corn.

"That's 3m tonnes more than we expected at the start of the season," he told Agrimoney.com.

The forecast is in line with those from Abares, the Australian commodities bureau, and the US Department of Agriculture.

Spread benefits

Indeed, the strong pace of exports had defied concerns over weakness in Australia's logistics, especially on the east coast, with mining and grains exporters competing for limited rail slots in some areas.

In Western Australia, CBH Group, the region's top grain handler, last month launched an Aus$175m fleet of 22 new locomotives and 574 rail wagons to boost its ability to transport grains to port.

Mr Mathews said that the ability of the country to raise exports by some 30% in 2011-12, despite logistical worries, was down to the "supply distribution of wheat across the country", with last season seeing strong crops across the major growing regions.

"That has negated the potential negative impact of potential bottlenecks on the east coast," he told Agrimoney.com.

The comments come amid growing concerns for the soon-to-be-harvested 2012-13 crop, particularly in Western Australia, but with parts of New South Wales and Victoria set for a steep drop in yields too unless rains are forthcoming.

Australia & New Zealand Bank on Friday dropped to 20m tonnes its forecast for the Australian wheat crop.
 

agrimoney