Australian feed wheat sales into Philippines highlights contrasting market outlooks

Singapore — The sale of Australian feed wheat into the Philippines late Feb. 9 highlighted two different market outlooks held by suppliers for the upcoming months, ahead of a price inverse the market is expected to face between Black Sea old crop and new crop, which will be available for shipment in July-August.

Import Group in the Philippines booked four 50,000-56,000 mt vessels of Australian feed wheat at $297-$300/mt CFR for shipment periods between April 25-June 26, S&P Global Platts reported earlier.

The traded levels were much lower than the second sharpest offers of $317.70/mt CFR, $312-$314/mt CFR, $309.90/mt CFR and $307.20/mt CFR for the four positions respectively, according to a lineup seen by Platts.

The substantial price difference between the traded prices and the second-best offers accentuate two schools of thought prevailing in the Australian wheat market currently.

The first category consists of eager sellers who are keen to put on more export sales before July shipment, when the availability of new crop Black Sea wheat may potentially increase competition in the Asian destination markets.

The price inverse from Black Sea old crop to new crop is massive at about $45-$50/mt currently, sources said. This means Australian wheat prices may also have to come down by the same level or more in order to compete against Black Sea new crop from July-August onwards.

On the other hand, the second group of suppliers are more confident that Australia will be able to continue competing July onwards, hopeful prices will remain somewhat elevated, given the current wheat export tax situation in Russia.

"We don't think its necessary to sell aggressively at this point. I think we are going to see a combination of front-end new crop price rallying, as all the consumers will rush to cover at the same time and there is uncertainty around timing and volume of grain availability and tax level, and old crop prices dropping some amount," said a trader in Australia.

Shipping slot availability, one of the main drivers of Australian wheat prices, was mostly full for April and was filling up fast for May-June shipments, with talks that China came back in the Australian wheat market in recent weeks following months of inactivity in bulk trade.

China in the week ended Feb. 6 was heard to have booked about 400,000 mt for March-May shipment and was in the market looking for another 200,000 mt, or four vessels, for May-June shipment, trade sources said.