Australia exports record 1.3 mil mt of wheat in January

Australia has exported a record 1.3 million mt of wheat in January, a massive 41% increase month on month, and a 52% rise from a year ago, according to export data seen by S&P Global Platts.

The Philippines was Australia’s number one export destination with 318,116 mt of wheat landing there in January, followed by Indonesia at 150,494 mt and China at 104,524 mt.

It was mostly feed wheat that was exported to the Philippines and this accounted for half the feed wheat and Australian Standard White — a grade that also prices off feed wheat — which Western Australia had produced during the 2019/2020 (October-September) season.

From end-October 2019 to the start of November 2019, a window of opportunity opened up for Australia to price into the Philippines feed wheat demand. Australia has a competitive tax advantage in the Philippines as it is exempted from the 7% import tax, which imports from Argentina and the Black Sea are subjected to.

This tax advantage made the price of Australian feed wheat competitive during the period, resulting in a flurry of deals for January shipment. About 75% of the total exports were concluded at prices between $253.50/mt and $255/mt CFR Philippines, according to S&P Global Platts data.

China was a highlight on the export data, having barely imported any Australian wheat in January 2019. This move is believed to be part of the country’s attempt to fairly administer 9.64 million mt of annual wheat quota after losing a World Trade Organization battle brought on by the US last year.

“Relationship with Australia is also getting better,” a source at a flour mill in China said, referring to the improvement in relations between the two countries since the anti-dumping probe was launched by China on Australian barley imports last year.

“Chinese new crop wheat is not available yet, so no one knows the actual quality,” the flour mill source added, suggesting that the country was seeking high quality wheat imports as a hedge against their local wheat crop.

Wheat exports to Indonesia also rose sharply, up 12% from December 2019 and 127% from a year ago.
Source: Platts