Australia, India feed wheat competition caps prices in Asia

The rivalry between Australia and India, the only competing origin in the Asian feed market, has kept Australian feed wheat prices on a downtrend for close to 2 1/2 months.

Platts assessed Australian Standard White wheat, with no protein guarantee, which generally prices into feed wheat cargoes, $24/mt, or 7%, lower since Nov. 15, 2021 at $313/mt FOB Kwinana Feb. 8, while the spread with Australian Premium White wheat widened by $28/mt, or 233%, to $40/mt.

The ASW began to nosedive from mid-November when the Australian wheat belt experienced widespread rainfall during peak harvest period, diluting protein levels in the west coast and increasing sprout damage in the east coast.

Issues with regards to wheat specifications pushed Australia to compete in Asia's feed sector, but intense competition from India has helped keep prices depressed and prevented any potential narrowing of price spreads with milling grades from record levels. The ASW-APW spread was at a record high $47.50/mt on Nov. 23.

"Indian [feed wheat] is the threat," an Australian trader pricing feed tenders in Asia said.

Though many feed buyers in the region have a preference for Australian feed wheat over Indian due to quality differences, price remains the dominant factor driving purchasing decisions as millers aim to minimize cost, while battling near record feed grain prices.

As a result, these price buyers have resorted to buying Indian feed wheat and highly sprouted feed wheat from Australia.

South Korean feed buyers, for instance, who traditionally do not consider India as an acceptable wheat origin in its tenders, have added the option since late last year given the competitive price levels.

These same buyers have also scrapped a maximum sprout damage requirement and have accepted Australian feed wheat with no guarantee on sprouts.

However, some buyers in Asia continue to exercise caution over increasing their wheat purchases from India due to quality concerns.

A trade source in Vietnam said a combination vessel with corn had 7,000 mt of Indian feed wheat rejected during the Lunar New Year after live insects were found.