Singapore | Reuters — Asian flour millers are looking at buying Canadian spring wheat for shipment early next year as supplies from drought-hit Australia are likely to remain slow, traders said.
Canadian western red spring wheat is being offered at around $345 a tonne, including cost and freight, nearly unchanged from last week, while Australia prime hard wheat is being quoted at $370 (all figures US$).
“A lot of mills have taken Black Sea wheat in Asia and now they need higher-quality wheat for blending,” said one Singapore-based trader. “Canadian spring wheat is ideal for blending and it can easily replace Australian hard wheat.”
Australian farmers are holding back wheat crop sales as dryness cuts yields in parts of the country’s eastern grain belt that is responsible for producing high-protein hard wheat.
Farmers have sold about a quarter of this year’s crop even as the harvest gathers pace with analysts pegging sales at 50 per cent of output by December-end versus about 70 per cent last year.
“We will be facing competition in bulk vessels as Australia has only limited supply of high-protein wheat, so there will be competition from the U.S. and Canada,” a Sydney-based trader said. “But Australian quality is much better because of the dry finish to the crop and there are concerns over rain damage to the Canadian crop.”
Canadian wheat sales into Asia could be limited on concerns over logistics as winters slow down the movement of cargoes, traders said.
The Taiwan Flour Millers’ Association has purchased 82,050 tonnes of milling wheat to be sourced from the U.S. in a tender this week, for shipment between January and February.
Chicago Board of Trade soft red winter wheat futures have dropped 2.8 per cent this week, while higher-quality spring wheat traded on the Minneapolis Grain Exchange has fallen by just around one per cent this week.
For lower quality wheat, buyers are likely to turn to India next year as supplies from the Black Sea region slow down, traders said.
“There are not many offers of Black Sea wheat, we have only a few offers from Ukraine but nothing much from Russia,” a second trader said in Singapore.
Ukrainian wheat with 11 per cent protein is being offered at $275-$280 a tonne, C+F, but not many deals have been reported this week in Asia.
— Naveen Thukral reports on crop commodity markets for Reuters from Singapore.