Asia’s hun­gry for wheat

But drought crip­ples Aus­tralia’s ex­port po­ten­tial

The Weekend Post - - Stocks -

ASIAN flour millers are ex­pected to seek rare wheat ship­ments from Ar­gentina in com­ing months as a sec­ond year of drought in tra­di­tional sup­plier Aus­tralia curbs sup­plies.

At present, Asian wheat im­porters, in­clud­ing the world’s biggest buyer In­done­sia, are buy­ing most of their wheat from the Black Sea re­gion.

But Rus­sia and Ukraine are ex­pected to run out of sur­plus sup­plies by the end of the year, forc­ing buy­ers to seek ship­ments from al­ter­na­tive ori­gins, traders and an­a­lysts said.

“From De­cem­ber on­wards, and in the first quar­ter of 2019, we ex­pect some of Ar­gentina’s sur­plus wheat to come to Asia,” said one Sin­ga­pore­based trader at an in­ter­na­tional trad­ing com­pany.

“We have lower wheat pro­duc­tion in many ex­port­ing coun­tries but Ar­gentina is look­ing at a big­ger crop.”

Asia is the world’s biggest con­sumer of wheat.

De­mand is ex­pected to top 304 mil­lion tonnes dur­ing the 2018/19 crop year, a record 41.1 per cent share of global con­sump­tion, ac­cord­ing to US Depart­ment of Agri­cul­ture (USDA) fore­casts.

Asia is also the top im­porter, with ship­ments of the grain set to hit 57.5 mil­lion tonnes this year, up more than 50 per cent since 2010/11 and the sec­ond-largest to­tal on record, the USDA data showed.

How­ever, sev­eral key wheat ex­port­ing coun­tries have faced droughts in re­cent months, and tra­di­tional sources of sup­ply may strug­gle to ful­fil all of Asia’s needs.

Pro­duc­tion in Rus­sia, the world’s biggest wheat sup­plier, is ex­pected to drop to 71 mil­lion tonnes in the year to June 2019 from all-time high crop of 84.99 mil­lion tonnes a year ago, ac­cord­ing to USDA data.

Aus­tralia low­ered its wheat fore­cast by nearly 13 per cent to 19.1 mil­lion tonnes on Tues­day as a crip­pling drought across the coun­try’s east coast has cut out­put from the world’s fourth­largest ex­porter to a 10-year low.

But wheat out­put in Ar­gentina is ex­pected to climb to 19.5 mil­lion tonnes from last year’s 18 mil­lion tonnes, well above the 11.3 mil­lion tonnes pro­duced in 2015/16, the USDA data shows.

“There were some con­cerns over dry­ness ear­lier but re­cent rains have been very good in Ar­gentina,” said an agri­cul­tural com­modi­ties an­a­lyst. “Ar­gentina’s wheat crop could even ex­ceed 20 mil­lion tonnes.”

Rus­sian wheat was quoted around $US250 a tonne, in­clud­ing cost and freight, into Asia this week, com­pared with $US275 a tonne for car­goes from Ar­gentina and $US290 for Aus­tralian wheat.

Newspapers in English

Newspapers from Australia

© PressReader. All rights reserved.