A Reuters poll showed up to 40 percent of Australia's just completed 2010/11 wheat crop could be downgraded to animal feed or low-grade milling grain, hit by heavy rains across many eastern wheat growing regions.
"Australia has been haunted by droughts over the past five years but recently has also been hit by very wet weather," said Peter Sand, shipping analyst with ship association BIMCO.
"The higher amount of wheat exports that was anticipated (this season) will not materialise."
Record flooding in Queensland has also disrupted harvesting though the state only accounts for less than 5 percent of national exports.
A trade source said despite lower overall wheat export availability the demand for panamax vessels, which are typically used to transport grains and coal, was expected to grow.
"The shipment program is running smoothly and it should pick up in the last week of January meaning that panamaxes will be actively sought by the end of next week," the source said.
Flooding in Queensland has sent panamax freight rates on the Baltic Exchange's main Pacific route to their lowest since 2009 as coal shipments had been cancelled, increasing vessel availability at a time when the freight market is struggling to absorb rising fleet growth.
Late Harvest
Shipping sources said lower Australian exports will need to be covered by other origins such as Argentina and the United States which could raise ton miles, a key indicator of shipping demand, measuring transported cargo volume multiplied by distance. This could provide a floor for weak freight rates.
"While sheer export quantities are being limited at the moment, there likely will come a time when importers need to source new cargoes from whoever is able to export grain," said Jeffrey Landsberg, managing director of dry bulk consultancy Commodore Research.
"This could ultimately result in solid tonne mile support for panamax and (smaller class) supramax vessels."
Analysts said wheat shipping berths across Australia were fully booked to the end of April.
The late harvest has meant some rescheduling of wheat shipments. Vessels that were due to load grain at Queensland port are now moving south to the port of Newcastle - one of the world's busiest coal export ports.
"The problem is competing for port space with coal and the coal guys can pay more," said Wayne Gordon, an analyst at Rabobank in Sydney. "To date there haven't been any real problems."
The Reuters poll indicated an average of 14.24 million tons would be exported in the marketing year to Sept. 30, compared with 14.75 million in 2009/10 estimated by the U.S. Department of Agriculture in November.
Australia is typically ranked among the world's top five wheat exporters.
Western Australia is normally the country's top grain exporting state but this year saw the crop shrivel because of the hottest spring on record.
"The largest part of both grains are going to be shipped out of South Australia because of the better performing crop there," said Malcolm Bartholomaeus, a grains analyst with Callum Downs Commodity News.
"There's a large shipping program slated in with a large variety of exporters compared with last year when the biggest shipping program was out of Western Australia." (Reuters)
