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ABB confirms push into wheat sales as drought cripples profit
Australias biggest barley exporter and maltster, ABB Grain, confirmed yesterday it expected to break into wheat exports in a significant way next year after the promised deregulation of the market by the new Labor Federal Government.

Speaking after the release of its drought-hit annual results, ABB Grain managing director Michael Ivaniw flagged a number of expansion plans, including shipping wheat to some of its existing customers in Japan, South-East Asia and the Middle East.

He said it would not be chasing market share for its own sake and would set a minimum profit of $5 a tonne on any wheat export contracts. But he also signalled it was eyeing at least two million tonnes, or more than 10 per cent of Australias normal wheat export volumes.

"We have a number of customers we supply barley to who would like us to supply them with wheat and they range from Japan right through to Asian countries like Malaysia and Singapore and into the Middle East," he said.

"If we were to do two million tonnes of wheat, the minimum profit number we would expect is $5 (a tonne). But we dont aim to market the whole wheat crop."

Meanwhile, AWB yesterday took further steps to ensure farmers remember it fondly when it loses its 69-year-old wheat export monopoly after this harvest.

It put its estimated pool return for the crop now being harvested back up to a record-busting $400 a tonne for the benchmark grade, saying it reflected a rebound in world prices over the past week.

The $15-a-tonne rise again puts it above most competing pools and the cash prices on offer to farmers from buyers operating in the deregulated domestic and container trade markets.

In the aftermath of the Iraq kickbacks scandal, Labor promised during the election campaign to significantly free up wheat exports by allowing any companies who met certain standards to be accredited to export wheat in bulk.

In contrast, the coalition had not spelt out its position, stripping AWB of its power over Australias biggest crop but giving grower groups until March 1 to try to come up with a replacement company to run the single desk.

Mr Ivaniw predicted the end to the national pool would change the way wheat was traded, with farmers likely to choose or be forced to warehouse it for longer after harvest.

In line with a profit downgrade seven weeks ago, ABB posted a slump in net profit for the year to September 30 to $7.3 million, down from $66.7 million. The slide reflected a 75 per cent plunge in grain receivals last harvest and about $20 million in unrealised losses on forward contracts which had to be booked at September 30 but which Mr Ivaniw said had since largely been recovered.

The negatives more than offset significant growth in its malting division, which near-tripled its pre-tax earnings contribution to $31.2 million as it benefited from the 100,000-tonne expansion of its Forrestfield plant last year.

Mr Ivaniw said ABB remained committed to its vertical integration strategy and expansion plans for 2008 included a $30 million feed-mill project in New Zealand, and further expansion of its malting operations, its joint venture in Ukraine and its new rural services division. He said a decision had not been finalised on whether it would buy WA wool broker Standard Wool Australia.
MGR Archive 28.11.2007
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