Black Sea wheat will oppress the Australian one on Asian markets in the second half of the year

01 Jun, 2017
Black Sea wheat will oppress the Australian one on Asian markets in the second half of the year
During the first five months of 2017, export of wheat, barley and rapeseed from Australia reached 17.2 million tonnes, up by 60% compared to the previous year, according to Thomson Reuters Eikon.

India has raised purchases of Australian wheat. China has also increased its purchases, but of high-quality wheat and barley. Australian wheat has also returned to the markets in Iraq.

Australia exports wheat at accelerated rates because of its high yields and low prices. In 2016 - 2017 wheat yield in Australia reached 35.13 million tonnes, up 17% compared to the previous season. Barley yield reaches 13 million tonnes (+ 25%) and rapeseed - 4.1 million tonnes (-1% below the historical record).

From the beginning of the season until  now, FOB prices of Australian wheat are within 185 - 195 USD/mt range. When accounting the freight as well, wheat prices are below those of the main competitors.

According to estimates of the grain lobbies at the end of the season (September), wheat stocks in the country will be 5 - 6 million tonnes, which is at last year’s level.

In the second half of the year, Russian and Ukrainian wheat could oppress the Australian at more competitive prices. Last week, Indonesian millers bought 60,000 tonnes of Black Sea wheat at price of 190 USD/mt, C&F given the Australian wheat price of 215 USD / mt, C&F.