(Recasts, adds quote)
By Bruce Hextall
SYDNEY, Nov 11 (Reuters) - Australia's biggest wheat crop in three years may reach the world market more slowly than normal over the coming months as a rail car shortage stymies deliveries from eastern farms to ports, traders said on Tuesday.
While the logistical issues won't have much impact on the
volume of grain that hits the market next year, the delays risk
causing a short-term supply squeeze and highlight the
challenges facing the world's second-biggest exporter after the
end of AWB Ltd's
The shortage of rolling stock is most acute in the east, where half of Australia's wheat is grown, and arises after major operators shifted their focus to addressing a chronic bottleneck in shipping coal, the price of which has surged.
"It's an industry problem, there's a lack of rolling stock so you can't be sure you are going to have trains," said Malcolm McMahon, general manager of merchandising at independent private grain trading firm Emerald Group.
Emerald is one of 19 newly licenced wheat exporters in the market to accumulate sufficient grain for bulk shipments under Australia's deregulated wheat export system which came into affect on July 1.
"There's a real reluctance through the majority of the trade to sell tonnage on a FOB (free-on-board) basis through the port simply because you can't be sure that when it comes time to move the product from up country that you can do it," said McMahon.
The delays threaten to slow the delivery of a crop estimated at around about 20 million tonnes, up by half from last year's drought affected 13 million tonnes. The harvest is underway in the northern parts of the country and will peak in December.
But traders saw little lasting impact on prices.
"I doubt whether there will be any impact on prices. That's all factored into the market at this stage and shouldn't come as big surprise to anybody, I hope," said Michael Hein, head of trading at Elders Toepfer Grains.
AWB, still one of Australia's largest grain traders and
GrainCorp Ltd
Previously, the bulk of the eastern states harvest was railed to port storage facilities in the first few months after harvest, but a desire by rail operators to improve efficiencies has led to fewer locomotives and less rolling stock being devoted to grain.
Instead some traders are turning to containers and trucking
by road, which will erode margins in a market where benchmark
U.S. prices
TRAINS CUT
Australia's largest rail freight business, listed
infrastructure group Asciano Ltd's
"Rail capacity is about half what it used to be yet there's still enough in Victoria and New South Wales over the full year to carry out the export task," said the spokesman.
"The difference is that this season not all the grain will be moved in the few months after harvest."
In the north-east state of Queensland, GrainCorp estimates there is a 750,000 tonnes rail capacity shortfall within state-owned Queensland Rail's system. Queensland is expected to produce 1.9 million tonnes of wheat and barley in 2008/09.
Queensland Rail's grain customers estimate rail capacity required over the next 12-18 months could be about 2.6 million tonnes, up from an average 560,000 tonnes over the past three years.
"QR is currently working closely with its grain customers to ensure that rail capacity over this period is maximised through the most efficient utilisation of trains under agreed commercial arrangements," said QR Bulk general manager Ken Lewsey. (Additional reporting by Naveen Thukral; editing by Jonathan Leff)