August 23, 2012

 

 

Asian wheat prices will likely increase for the rest of the month as growers hold back crops in anticipation of further gains and firm futures due to Western Australia's dry weather and strong East Asia demand.

 

Australian wheat prices have already moved up by around US$15 a tonne in the past one week and are expected to rise further due to dry weather in the western parts.

 

If adverse weather conditions persist into September, 2012 Western Australian wheat production may fall to six million tonnes compared with earlier projections of eight million tonnes and actual output of 11.6 million tonnes in 2011, ANZ Banking Group said in a report.

 

Australian Premium White wheat is now offered around US$360/tonne, free on board, for shipment in the December-January period from the west coast.

 

Australian Standard White wheat is offered around US$350/tonne, FOB. Some exporters are even quoting above US$370/tonne for the two grades. Prices from the east coast are US$15/tonne lower. Western Australia's 2012 production hinges on rainfall over the next month.

 

Yield potential is already well below trend in the northern and eastern wheat belt due to the late start to the season and one of the driest July months ever on record, Paul Deane, Melbourne-based Senior Agricultural Economist with ANZ Banking Group, said in the report.

 

Australian sales for the new crop, which will be harvested from October onward, are slow due to uncertainty over output and cheaper offers from other origins, a Perth-based executive with a commodity trader said.

 

US soft white wheat is relatively cheaper than corresponding Australian grades.

 

South Korea's flour mills Friday (Aug 17) bought US soft white wheat with 8.5% and 9.5% protein at US$329.79/tonne and US$337.15/tonne, FOB for arrival in November and December.

 

Taiwan Friday (Aug 17) bought US western white wheat with 9% protein for shipment next month at US$341.11/tonne, FOB.

 

Indonesia has bought a few Australian cargoes but East Asian countries are increasingly looking at buying from India.

 

Australian traders are also tapping into opportunities to supply Indian wheat to their overseas buyers.

 

In a recent Indian tender to export wheat from government stocks, Australia's J.K International made the highest offer of US$308/tonne, FOB.

 

Australian farmers are also reluctant to make sales of the next crop due to weather uncertainties. They expect higher prices if dry weather prolongs, an exporter in Melbourne said.