Australian wheat prices steady amid limited spot supply
Australia APW spot wheat prices are holding steady over the last two weeks, at $205.50-$207/mt, as limited supply and steady demand from non-traditional Black Sea wheat buyers such as Vietnam, Malaysia and China offset potential downside from intense competition from new crop Black Sea wheat, traders said Friday.
APW wheat was indicatively offered at $203/mt FOB South Australia while from Kwinana, cargoes were indicatively offered at $210-$213/mt FOB, traders said.
“If I have a shipping slot, I would not sell APW basis WA with only [a] freight differential of $3-$4/mt… at most might reduce some fobbing cost in WA at which is about $35-$36/mt and sell it slightly below Western Australia pricing,” commented an Australian trader.
Indonesia — the world’s second largest single wheat importer after Egypt — typically switches to Black Sea wheat whenever prices fall to a discount of $15-$20/mt to Australian wheat, depending on seasonal crop quality.
On May 17, there was talk of one Panamax cargo of 11.5% protein Black Sea wheat for October loading traded at $190-$192/mt CFR Indonesia, or even lower, which would possibly be the lowest traded level heard for the new crop so far. “Australian wheat needs the dollar to fall more to become competitive, they are picking up demand from outport Indonesia and standard demand from Vietnam/Malaysia who don’t buy Black Sea [wheat],” said a Singapore-based trader.
Several bulk grain exporters in Australia this week have also announced record export volumes from eastern Australia, South Australia and Western Australia, indicating lack of pressure to sell given the strong demand and strained logistics, traders said.
Furthermore, old crop retentions are high, as new crop prospect appeared murky with three-month weather forecast unfavourable.
Australian farmers typically begin new crop planting in late-April to May although weather before harvest and during grain development could be crucial too, traders said.