Australia exports 2.5 mil mt of wheat in Dec, record volume to China: source

Singapore — Australia shipped 2.5 million mt of wheat in December 2020, up 173% from December 2019, according to data obtained by S&P Global Platts from a market source Feb. 5.

A crop turnaround from three consecutive drought years to the second largest wheat production ever, estimated at 31.2 million mt, coupled with tight export supply from other major wheat producers, has helped Australian suppliers so far this season (October 2020-September 2021).

China was the number one destination, accounting for 32% of the total exports with shipped volume at just over 800,000 mt. This marked the largest ever monthly wheat export to any single country, despite trade tensions being at an all-time high between the two countries.

China has been on a grain buying spree to replenish state reserves and fulfill its obligation to the World Trade Organization. However, the main factor encouraging Chinese buying was the price of new crop wheat at the time of purchase, sources said.

A bulk of the December-loading trades were likely concluded before September when new crop wheat was priced at competitive levels internationally, and also prior to the trade friction escalating to new heights, sources added.

Behind China was Vietnam, as the second biggest importer of Australian wheat in December, with exported volume at 327,000 mt. Indonesia and the Philippines were the third and fourth largest destinations with export volume at 260,000 mt and 206,000 mt respectively, according to the data.

Total export volume to the top three southeast Asian countries in December was up 178% year on year.

This was as a result of Australian wheat being the most competitive in the region as Russia and Argentina, the two most sought after origins in the last couple of years, face elevated prices from dry weather conditions and tight export availability from export restrictions, sources said.

In terms of the average price, the Philippines paid the second lowest, behind Saudi Arabia, at $230/mt, highlighting that a bulk of the grain, if not all, was feed wheat, according to the data. The Philippines generally chases the cheapest origin feed wheat. The country usually relies on US supply for flour milling purposes.

China on average paid $242/mt while Indonesia and Vietnam paid $254/mt and $253/mt, respectively. These prices constitute of a blend of feed and milling grades.

Australian wheat prices have been on an upward trend since mid-September with Australian Premium White wheat up $40.50/mt at $287/mt FOB Kwinana Feb. 5, Platts data showed.

From these average prices, "you can see which country is willing to book first and which country is more [of a] spot buyer," a trader said.