March 26, 2012


CBH sees firm Chinese demand for Australian feed wheat



Higher demand for Australian wheat in China may boost Western Australia's export efforts for 2012, Tom Puddy, head of grain marketing at Cooperative Bulk Handling Ltd. said Friday (Mar 23).


The region is already seeing strong demand in traditional markets. "CBH has seen an increase in demand for feed and milling wheat in China," he said by phone.


Agricultural lender Rabobank said last week that it expects Australian wheat exports to China to double to 1.2 million tonnes in the current marketing year ending Sept. 30, as prices remain competitive, making Australian feed wheat a viable substitute for US corn.


Such is the demand from China for feed wheat that there is little feed left in Western Australia from the 2011 harvest, he said, adding most of it has already been sold to China, South Korea, the Philippines and Vietnam.


There is, however, plenty of feed wheat still available in Australia's eastern states, he said.


Of the 23.29 million tonnes of wheat held by bulk handlers and grain traders as at February 29, 15.90 million tonnes, or 68%, was high grade milling wheat while the remaining 7.39 million tonnes was lower grades mainly sold as livestock feed, the government's Bureau of Statistics said Thursday.


Most of the wheat produced in Australia is usually milling grade, used to make food products from bread to noodles, but unusually high rainfall in some areas last year damaged and delayed the harvest until late 2011, resulting in widespread quality downgrades and greater availability of feed wheat.


Feed wheat has seen strong demand in recent months as it was priced very competitively compared to corn from the US and South America, Puddy said. Increasing meat consumption in countries such as China has helped boost demand for feed.


"China's demand for feed grains is continuing to grow, to service their protein demand" with a shift in dietary habits away from rice, he said.


"We've never shipped so much feed wheat into China before and I think the outlook is very strong," he said without citing volumes. "It's the trend of things to come, basically."


CBH dominates the grain trade in Western Australia through its network of almost 200 upcountry storage sites, four coastal export terminals and an active marketing program.


Following a record grain harvest in the 2011-12 crop year ending March 31, CBH shipped out 1.29 million tonnes of wheat in February alone, bringing the total shipped between November 1 and February 29, to 4.18 million tonnes, just shy of the record set for this period in 2004, of 4.2 million tonnes.


Such strong demand from China has come at a time when demand in other markets has been "consistent," he said, naming Japan, Vietnam, South Korea, Indonesia and the Middle East as key markets for Australian wheat. "We're seeing a bit of Australian wheat working it's way [also] into Iran."