Asian millers are about to buy a record amount of Black Sea wheat in the next marketing year, as traditional Australian suppliers expect the second crop failure in a row.
In the last two months, Asian millers have ordered up to one million tonnes of black wheat from the new crop; further orders are expected.
The rising sales from the Black Sea region to Asia is curbed by Australian dominance in supplying the region where wheat consumption is increasing as the middle class consume more noodles, pizza and cakes instead of rice.
Even large mills, which preferred to buy Australian wheat, now use Black Sea wheat because it is cheaper and the quality has improved.
Black sea wheat with 11.5% protein was traded at 220 to 227 USD / ton C & F, comparable Australian wheat costs 255-260 USD / ton. Mills pay a premium of 10 to 15 USD / ton, because Austral wheat has a better quality.
Australian farmers are currently planting the seeds for the 2018/19 harvest in dried soils.
Indonesia bought an estimated 12 million in 2017Tons of wheat and will buy half of its wheat needs in Russia and Ukraine in the coming marketing period. This will double deliveries from three million tons to six million tons.
Indonesia is Asia's largest wheat importer, other buyers serving in Russia are Malaysia, Vietnam, India and Bangladesh. In 2017, Asia purchased 12.6 million tons of wheat, compared to 10.6 million tons in the previous year.
The modern mills mix low quality wheat with quality wheat to produce the right end product.
Wheat production in Australia could drop further from its lowest level in a decade from 21.2 million tonnes last year. The latest official estimate for 2018/19 is 23.7 million tonnes, but after the drought in April and May, it is now estimated that only 20 million tonnes are left.
Text: HANSA Derivatives Trading GmbH /
