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Australia Wheat Quality Slumps In Bittersweet Harvest

Up to half of Australia’s current wheat harvest could be downgraded to animal feed or low-grade milling grain, raising concerns for a severe global shortage of higher-quality wheat and marring the nation’s biggest crop in eight years.

Crop analysts and farmers told Reuters that up to 50 per cent of the 2010-11 crop would be downgraded to general purpose wheat or various grades of feed wheat.

“I’ve been reasonably lucky, getting around 90 per cent (harvested) in time, but the rest will be rubbish that won’t be worth harvesting,” said Richard Clark, a grain grower in northern New South Wales state, about 50 km south of the flooded state of Queensland.

Clark said most of the grain he had harvested would make good milling quality but he only expected to harvest around 2,000 tonnes out of 4,000 to 5,000 tonnes he had expected at the start of the season.

Australia’s 2010-11 harvest is around 75 per cent complete but is running up to five weeks late because of above-average rain across many eastern wheat-growing regions. The Queensland floods have also disrupted the harvest, though this state only accounts for less than five per cent of national exports.

“There’s going to be a severe shor tage of milling wheat around the world because of problems here, dry weather in Argentina and a potential winter wheat kill in the United States,” Clark said.

U.S. high-protein wheat futures in Kansas City and Minneapolis held close to two-year highs on Tuesday as the Queensland floods reinforced concerns of a global shortage of milling wheat.

Wheat for March delivery touched $8.25 per bushel on Monday, the highest price since drought hit the Black Sea region last year, forcing Russia to ban grain exports.

“Downgrades are commonplace, with large amounts of feed wheat entering the system, bolstering already burgeoning domestic feed grain supply expectations into a domestically weak demand scenario,” said Wayne Gordon, a grains analyst at Rabobank in Sydney.

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