Australian wheat is likely to meet less competition in the Asian market in 2011 as there will be less rival Black Sea grain, which was threatening its dominance in the last few years, reported “Kazakh-Zerno” IA with reference to the “Business Spectator“.
Wheat from Australia, the world’s fourth largest exporter, could also take a bigger share of the Middle Eastern and African markets, industry executives said.
“Some of the origins which have been competing into the Asian market for the last couple of years won’t be there as aggressively, so Australia has a good window of opportunity to put wheat into the international market,” grain exporters association vice president Alick Osborne said.
“As the supply from other origins and cost of freight to deliver it to other markets changes… Australia will also have wheat available for Middle East and east African markets.”
Most buyers in Southeast Asia traditionally import the bulk of their wheat from Australia, but in the last few years cheaper supplies from Russia and Ukraine have posed a challenge. Mills in Indonesia, Vietnam, Malaysia and Thailand started blending larger portions of Black Sea wheat to make flour.
Extreme drought conditions in eastern Europe have hammered the grain crop there.
Russia may harvest less than 80 million tonnes of grain this year as severe drought has hit many key grain-growing regions, Deputy Economy Minister Andrei Klepach said on Tuesday.
Ukraine’s government may limit food grain exports in the second half of the 2010/11 season to avoid domestic shortages in the wake of crop damage, analyst UkrAgroConsult said.
The Chicago Board of Trade front-month wheat contract rose almost 28 per cent in July, in its biggest monthly gain since 1996 on estimates of lower output in Canada, Russia, Ukraine and parts of western Europe.
Bumper production
Wheat output in Australia, the world’s fourth largest exporter, is estimated between 22 and 23 million tonnes, up from 21.7 million tonnes last year on crop-friendly weather, although weather in the coming months is crucial.
“General estimates are around 21 million tones, it might vary a little bit,” Grain Growers Association chief executive Peter Flottmann said.
“If you are looking at that sort of number it gives us roughly 15 million tonnes of exports, which is pretty reasonable.”
Traders said the outlook for high-protein hard wheat is mixed, with expectations of lower output in Queensland and good production in New South Wales.
“High protein wheat in Queensland will be probably lower than last year and bit down on the average production,” Mr Osborne said. Mr Osborne is also the managing director of Louis Dreyfus commodities Australia.
“The crop in northern New South Wales at this stage should be relatively good, but you always have concerns over the weather which reduces protein profile of that crop.”
Australian physical prices have moved higher in line with the futures market.
Australia prime wheat was quoted around $US285 a tonne, including cost and freight into Southeast Asia, up from $US270 a tonne at the beginning of July. Australia prime hard wheat is being offered at $US315 a tonne C&F – a gain of around $US25 to $US35 since the beginning of this month, traders said.
