Australian wheat prices hit over 3-month low on tepid demand, selling pressure

New York — Australian Premium White wheat hit a more than three-month low March 26 on the back of weak buying interest from end-users in southeast Asia and selling pressure ahead of the Black Sea new crop marketing year starting end-July.

The S&P Global Platts assessed APW index has been falling since the start of March, shedding $21/mt from March 8 to reach $269.50/mt FOB Kwinana March 26. This is also 9% lower than the year-to-date peak of $297/mt on Jan. 21.

Millers in southeast Asia have been bidding their time all month, patiently waiting to catch the bottom, as prices continued to retreat amid a lack of bullish news.

Southeast Asian flour millers are still open for May-June shipment and shipping capacity from major Australian ports is heard to be relatively tight for May as compared with June.

"Overall, it's not as tight as what we have seen previously for Mar-Apr loading," said another Australian trader.

Number of Australian suppliers, on the other hand, are in panic mode, facing a steep price inverse ahead of July, when new crop Black Sea wheat is available for exports.

"We are lowering offers almost every day but there are no bids. It's like offering in thin air," said one trader in Australia.

Feed millers in southeast Asia have also adapted a wait-and-see attitude, convinced prices are bound to come down further.

This is in contrast to feed millers in South Korea, who have in total booked 459,000 mt of feed wheat throughout the week of March 21. The Aug. 5 arrival cargo traded at $287/mt CFR while the sharpest trade was concluded at $268.40/mt CFR for Oct 20 arrival. Most of the seven cargoes were likely priced out of the Black Sea, sources said.

The move comes as South Korean feed buyers have switched from corn to feed wheat with the price spread between the two feed components widening further in the negative territory, S&P Global Platts reported earlier.

Nonetheless, the market is expecting southeast Asian buyers to start covering from next week as they come under time pressure to cover demand for May-June shipment.

"Prices are now attractive so might see some action Monday-Tuesday before the USDA report which is to be released mid-week," said the second Australian trader.