July 28, 2011
Australian wheat prices will likely come under pressure from Black Sea region supplies, while domestic farmers are withholding new-crop sales in anticipation for higher prices.
The new-crop Australian prime wheat is quoted at around AUD255 (US$279) a tonne on the east coast and AUD268 (US$293) on the west coast, traders said Wednesday (Jul 27).
"Australian values will come under pressure as we have got to export 73% of our crop," said Peter Rizzo, managing director of FCStone Australia. "It could be 75% if we have a bigger crop."
Referring to a Thai flour mill's purchase of Russian wheat at US$290 per tonne, including cost and freight, for shipment in August, Australian traders said they would struggle to match this price even for feed quality wheat.
More Black Sea wheat deals are likely as buyers eye cheaper cargoes from the region, which is making aggressive offers.
Egypt, the world's largest wheat importer, has bought close to half a million tonnes of Russian wheat in recent tenders.
Russia expects to reprise its role as a leading grain exporter this season due to a good harvest after last year's severe drought forced it to impose an export embargo.
Australian farmers who have seen higher prices last year are making slow sales as they expect rates to pick up.
Wheat output in Western Australia, which produces high-quality milling grain, is likely to double to around nine million tonnes this year following ideal crop weather, boosting prospects of wheat exports from the country in the coming marketing season.
Western Australia produces prime and noodle varieties of wheat that are supplied to Asia's top importers such as Japan, Indonesia and Malaysia. But parts of the country's eastern region, which have been dry, grow high protein hard wheat.
On the whole, Australia, the world's fourth largest wheat exporter, expects a 26.2 million tonne crop this year, just below a record 26.3 million in 2010-11, and the quality is seen higher after late-season rain damaged much of last year's crop.