Asian buyers step up Australian wheat purchases as output rebounds

Reuters – Asian demand for Australian wheat is expected to bounce back in the months ahead as the country is estimated to produce its biggest crop in four years, offering stiff competition to suppliers in the Black Sea region.

Around 1.5 million tonnes of wheat are scheduled to be shipped out of Australia in December with more than one million tonnes heading to Asian destinations led by China, the Philippines and Vietnam, two trade sources said.

“Demand for Australian wheat is really strong,” said Ole Houe, director of advisory services at agriculture brokerage IKON Commodities in Sydney. “Price-wise we have been really competitive.”

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Analysts and traders expect Australia’s wheat production to beat the official estimate of 28.91 million tonnes made in September, and come in close to 30 million tonnes — the highest since 2016-17.

This will leave the country with an export surplus of about 18 million tonnes, taking into account domestic consumption of nine million tonnes and ending stocks of three million tonnes.

Australia is fully sold out slots for December shipment, said one Singapore-based trader. “Buyers who missed out December are now looking at January shipment.”

China bought Australia wheat in the last few months at around US$235-$240 a tonne, including cost and freight, although the price has now risen to around $265 a tonne.

Still, it is competitive as compared with Russian wheat of similar quality quoted at US$270 a tonne, C&F.

“Asian millers are generally willing to pay a premium of US$5-$10 for Australian wheat over Black Sea origin,” the Singapore trader said.

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