* East coast wheat protein scales lower than expected
* W.Australia wheat quality higher, but yields down
* Asian importers may seek more American spring wheat
* Rains may hamper Western Australia wheat harvest
By Colin Packham and Naveen Thukral
SYDNEY/SINGAPORE, Oct 31 The early wheat harvest
in Australia, the world's second largest exporter, is showing
lower protein scales and poor yields, analysts and traders said,
heightening concerns over global grain supplies as shipments
from top exporters dwindle.
Farmers are finding lower-than-expected protein scales in
New South Wales and Queensland, the states responsible for
producing top quality hard wheat, while a dry spring is
resulting in a decline in yields across Western Australia.
"Given the hot and dry end to the season, we were expecting
protein levels to be near the long-term average," said Tom
Howard, general manager at marketer Philp Brodie Grains.
"However, what we have seen so far is protein levels falling
short of historic averages."
Asia's top buyers, who rely on Australia for the bulk of
their milling wheat supplies, may be forced to import larger
volumes of high-protein spring wheat from the United States and
Canada, supporting global prices.
U.S. wheat futures have already climbed more than 30
percent this year as a devastating drought across the U.S. grain
belt curbed yields and dryness hurt crops in Russia and Ukraine.
The U.S. Department of Agriculture forecast in a
supply-demand report this month that world wheat stocks would
drop 13 percent by the end of 2012/13 from a year ago for the
lowest closing stocks in four years.
Last week, the International Grains Council cut its forecast
for total grain stocks at the end of the 2012/13 season by 4
million tonnes to 328 million, representing a fall of 44 million
tonnes, or 12 percent, from year-earlier levels.
In eastern Australia, where farmers have started harvesting
their crop, protein content in Australian prime hard wheat is
showing lower that the usual level of 13-14 percent.
"Quality is an issue, as per early reports from farmers,"
said one cash trader in Sydney. "There is a lot of below 11
percent protein out there."
Growing export demand has helped reverse this week what had
been a historic discount between U.S. hard red spring wheat with
15 percent protein and the lower grades, trade sources said.
ASIAN BUYERS AND QUALITY GRAIN
China bought 295,000 tonnes of Canadian spring wheat earlier
this month, Canadian industry sources have said, underscoring
Asia's rising appetite for high-protein North American grains.
Indonesia, Japan, South Korea and Malaysia rely heavily on
Australia for supplies of milling wheat.
In Western Australia, where the harvest is less advanced,
the protein quality of wheat committed has been better than last
year but adverse weather conditions are likely to cause a
significant fall in output, said David Capper, an operations
manager for CBH Group.
The group, Western Australia's main grain handler, has
pegged wheat production at 5.5 million to 6.3 million tonnes,
well below a record 11.73 million tonnes harvested last year.
The Australian government pegged production at 22.5 million
tonnes in its most recent forecast in September, but analysts
and traders believe it will be closer to 21 million.
East coast wheat got off to a good start amid good soil
moisture following two consecutive La Nina weather patterns,
which gave farmers favourable sub-soil moisture, and good rains
in May and June provided timely topsoil moisture for planting.
However, analysts said weather at the end of the growing
cycle across Queensland and New South Wales was unfavourable.
Dry weather has hurt Western Australian yields, with some
parts of the state recording their lowest rainfall levels.
The harvest in Western Australian may suffer, with rains
predicted at the end of the week, Capper said.
Weather conditions in New South Wales are more favourable,
albeit with a small chance of rain on November 4, the Australian
Bureau of Meteorology says.
(Editing by Clarence Fernandez)