The first harvest results for Australia's large wheat crop show lower protein levels than expected. Market participants are concerned as the market is already suffering from bottlenecks from major exporters in the northern hemisphere.
Australia is expected to be a major wheat exporter in the 2021-22 season, but heavy rains have hampered crops in some areas and caused some crop degradation, analysts and traders said.
"In Western Australia, nearly half of the crop this year will be average Australian Standard White (ASW)," said Ole Houe, director of advisory services at brokerage firm IKON Commodities in Sydney. "In a normal year it is only 25% of total production."
Australian Standard White (ASW) is popular with Asian millers - it has 10.5% protein, while Australian Standard White (ASW) wheat has under 9% protein.
Australian market analysts have estimated wheat production targets for the season ending June 30, 2022 at 32.6 million tons. That would be the second largest Australian wheat crop ever.
Wheat importers, especially in Asia, were looking forward to a bumper crop in Australia to replenish supplies that had become scarce due to export restrictions in the Black Sea region.
However, the lower protein levels are raising new concerns about the amounts of high quality wheat from Australia.
"Traders have been selling higher quality milling wheat, but we're seeing more lower-protein wheat when the harvest begins in Australia," said a Singapore-based trader. "Many suppliers are now short on the sale of milling wheat."
Lower milling wheat production in Australia is likely to result in higher demand for supplies from the United States and Canada, further supporting global prices, which hit a 9-year high this week.
"People are looking for APW and that's why the prices of this variety are rising," said a second Singapore-based dealer.
APW wheat is trading at an all-time high of $ 365 per ton fob Western Australia, up from $ 340 per ton a few weeks ago, while ASW sells at $ 325 per ton.
"The spread between the two grades is typically $ 10 per tonne, but it has widened over the past 10 days," he said.
Source
Hansa Terminhandel GmbH