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29 Jan 2020 | 08:02 UTC — Singapore
Singapore — Australia's major wheat exporting states South Australia, Victoria and Western Australia have exported just over 3 million mt of wheat since October, a shipping lineup seen by S&P Global Platts showed Wednesday, close to the half-way mark of the country's anticipated exportable surplus of 7 million-8 million mt for the current marketing year October 2019-September 2020.
Another 566,000 mt of wheat was seen on the shipping stem for February, the lineup showed.
While overall 2019-20 production was deemed disappointing by market sources, who pegged Australia's total wheat production for the marketing year at 14 million-15 million mt, the pace of exports and inquiries from Asian consumers was supporting prices, despite their strong premiums to global wheat prices.
Australian Premium White wheat prices have surged 15% since November 20 to hit an 11-month high of $274/mt FOB Kwinana Tuesday, Platts data showed.
Extreme dryness throughout the crop development period has halved Western Australia's wheat crop to 5 million mt and resulted in a higher protein wheat crop. The region has produced only 12% or around 602,000 mt of Australian Standard White wheat, a low grade wheat that generally prices into feed wheat cargoes, down from 38%, or 3.7 million mt, last season. As a result, the spread between APW and ASW had narrowed to $1/mt Tuesday from $6/mt in early October.
"I think people are really happy with the quality, especially for hard wheat," said a trader in Australia, referring to the premiums end-buyers in importing countries such as China are currently willing to pay.
China was heard to have booked 400,000 mt of wheat from Australia so far this season, taking the market by a surprise given current Australian wheat premiums and the progress made in the US-China trade deal, Platts reported earlier.
China typically imports high quality wheat to cover a domestic shortage for making noodles and baked products. The move may also 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 by the US last year.
According to another shipping lineup seen by Platts, the Philippines was the number one destination for Australian wheat exports over October-November at close to 300,000 mt. followed by South Korea and Japan at 205,000 mt and 130,000 mt respectively.
If the export sales continue at the current pace, Australian wheat supply would likely dry up by May, several sources said.
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