July 30, 2012

 

 

Drought in the Black Sea region and the US has spurred Asian wheat buyers to look into sourcing more in India and Pakistan, trade participants and analysts said.

 

Russia's output is projected to fall 20% to 45 million tonnes, and its exports to plunge by 59% to 9 million tonnes, in the marketing year that started July 1, the London-based International Grains Council said.

 

Meanwhile, Ukraine's output is expected to fall 42% to 13 million tonnes, and its exports 34% to 3.5 million tonnes, the IGC said.

 

US spring wheat plantings haven't been hurt much by the severe drought in the US Midwest, but prices are still rising in line with record corn and soy prices.

 

September wheat hit a 4-year high of US$9.4725/bushel Monday (July 23). The contract is now trading around US$8.88/bushel.

 

Earlier this month, Taiwan paid US$75/tonne more for US wheat than it did a month earlier.

 

India and Pakistan have lower volumes available for export compared with the US and Russia but they can offer the cheapest prices, said a Singapore-based executive with a global commodity trading company.

 

Asian importers that immediately require August-October shipments are expected to source them from South Asia, he said.

 

Australia is a major wheat supplier to Southeast Asia but exporters already have large orders to fill, so some of the additional demand will spill over to India and Pakistan, a Melbourne-based trading executive said.

 

Australian Standard White wheat for September shipment is now offered around US$355/tonne, FOB, and Australian Premium White is around US$360/tonne, traders said.

 

Wheat from India and Pakistan is around US$45-US$50/tonne cheaper.

 

The cheapest grade of US soft white wheat traded in East Asia last week around US$321-US$323/tonne, FOB, up from US$250/tonne in mid-June. Prices of Hard Red Winter have increased to US$352/tonne from US$265/tonne, while those of Dark Northern Spring are up to US$385/tonne from US$315/tonne.

 

Sri Lanka recently purchased a 20,000-tonne Pakistani cargo comprising both 13% and 14% protein that was priced around US$308/tonne and US$311/tonne, respectively, free on board for prompt shipment.

 

Pakistan has sold more than 100,000 tonnes of wheat this month.

 

India's state-run PEC Ltd. Wednesday (July 25) issued a tender seeking bids from private companies to export 60,000 tonnes of wheat from government stocks through Krishnapatnam port. It is the first government tender aiming to export wheat from the east coast and is expected to boost sales to Southeast Asian countries such as Indonesia, Malaysia and Vietnam.

 

Traders forecast April-September Indian exports to reach around 1.5 million tonnes.

 

India has exported more than one million tonnes of wheat in the marketing year that started April 1, traders and cargo surveyors said, including exports sent by road to Bangladesh and cargoes being loaded at ports.