Australia: ABB Grain rises on rain outlook

ABB Grain Ltd. rose by the most in more than six weeks in Sydney trading on the improved outlook for rain in Australia and after JPMorgan Chase & Co. initiated coverage with an ``overweight'' recommendation, Bloomberg reported April 22.

Australia's largest barley exporter rose 46 cents, or 5.2 percent, to A$9.36 on the Australian Stock Exchange in Sydney. That's the biggest gain since March 6.

South Australia, where Adelaide-based ABB Grain collects most of its grain, may get the most rain in five months this week as farmers prepare to sow crops. ABB Grain is best placed of the Australian grain stocks to benefit from higher soft commodity prices and demand for malt, JPMorgan said in a note to clients dated April 18.

``The rain has come at a very sweet time because all the institutions are thinking about the stock'' after the JPMorgan report, John Lawlor, senior research analyst at Ord Minnett Ltd., an affiliate of JPMorgan, said from Brisbane. ``Whilst all the fundamentals are in favor of ABB it does tend to trade around the current crop, so if you get good planting rains, the stock tends to race up.''

Rival Australian grain company AWB Ltd., the nation's biggest wheat exporter, rose to its highest since January 8. AWB added 20 cents, or 7.2 percent, to A$2.99.

South Australia may get 15 millimeters to 30 millimeters (0.6 to 1.2 inches) of rain in the seven days from yesterday, with heavier falls in southern parts, Brett Dutschke, a meteorologist at the weatherzone.com.au, said from Sydney yesterday. That would be the most rain since November, he said.

Grain farmers in Australia, the world's sixth-largest wheat exporter, rely on rain at this time of year to plant winter crops including canola, barley and wheat.

ABB Grain has risen 11 percent this year compared with a 12 percent drop in the benchmark S&P/ASX 200 Index.

23 April, 2008