INTERVIEW: Black Sea disruptions poised to benefit Australian wheat: Voznesenski

Australia could be positioned to capture additional Asian wheat demand as its crop develops better than expected, while prolonged disruptions to Black Sea exports could eventually force buyers that have delayed purchases back into the market, Dennis Voznesenski, agricultural economist at Commonwealth Bank of Australia, told Platts.

Australian wheat prospects have strengthened as harvest approaches, particularly in Victoria and South Australia, potentially offsetting crop stress in drier areas of northern New South Wales and southern Queensland.

"The Australian crops are looking really phenomenal in South Australia and Victoria," Voznesenski said. "Those crops are looking unreal."

Farmers he spoke with recently were seeing yields around double last year's levels, while sentiment in Victoria was particularly positive about the size of the upcoming crop.

"Everyone's super excited about how big the crop is," he said.

South Australia and Victoria also have significant soil moisture, providing some protection if conditions turn drier. Western Australia's outlook has improved as well, with harvest roughly a month to a month and a half away.

"Western Australia, better than expected," Voznesenski said. "The outlook's improved a little bit from a weather perspective."

The main Australian crop risks remain northern New South Wales and southern Queensland, where dryness could increasingly stress wheat. However, stronger production elsewhere could limit the impact on national output.

"In terms of national figures, what comes down in northern New South Wales and Queensland could be compensated possibly by upgrades in Victoria and SA," he said.

Black Sea disruption redirects demand to Australian supply

The improving crop outlook comes as Australian wheat is already attracting stronger demand following disruptions to traditional Black Sea trade flows.

"We've definitely seen a pickup in prices, especially in Western Australia," Voznesenski said. "I'd say, yeah, the demand's become stronger, both East Coast and Western Australia."

The escalation of the Russia-Ukraine conflict has pushed buyers to consider alternative origins, including Australia, as the ability to move grain through traditional Black Sea channels remains constrained.

Ukraine can redirect some grain through rail and the Danube, while Russia can use Baltic export routes, but those alternatives offer considerably less capacity than normal Black Sea deep-sea shipments. Bulgaria and Romania have meanwhile provided some alternative supply too.

For Voznesenski, Russia-Ukraine remains the main supply-side geopolitical risk facing the global wheat market.

"The biggest things that could happen have happened," he said, pointing to the disruption of Black Sea export capacity.

Impact on Asian destination procurement strategies

The immediate impact on Asian purchasing, however, has been restrained by buyers' reluctance to chase wheat prices higher.

Asian importers have largely taken a wait-and-see approach, delaying larger purchases in hopes that Black Sea availability could recover. Voznesenski said the strategy is understandable because flour mills risk buying expensive wheat only to see competitors secure cheaper supplies later if the market falls.

But buyers cannot remain out of the market indefinitely if the disruption becomes prolonged.

"I get why they're waiting for the last minute, but eventually they're going to have to go to the market when those stocks get low," Voznesenski said. "The question is when. When is that point?"

That inventory trigger could become increasingly important if Black Sea disruptions extend further into the marketing year. Once stocks reach uncomfortable levels, Asian buyers may need to return to alternative suppliers for larger volumes.

Australia could be among the origins positioned to meet that demand. Stronger buying has already been observed in Western Australia and on the East Coast, while comparatively high Canadian and US wheat prices have also improved Australia's competitiveness.

Still, Australia will need to remain competitively priced to move a potentially larger exportable surplus.

"We're not a price maker. We're a price taker," Voznesenski said. "If we become too expensive, exports will just probably fall off, and we won't export as much until prices fall."

Platts assessed Australian Premium White wheat up $5/mt at $313/mt FOB Kwinana Sept. 22 for cargoes loading between Nov. 21-Dec. 21. Platts assessed Australian Standard White wheat with no protein guarantee up $2/mt at $302/mt for cargoes loading over the same period.

Platts assessed Canada Western Red Spring Wheat 13.5% FOB Vancouver 30-45 days forward at $314.62/metric tons on Sept. 22. CWRS Wheat 13.5% FOB Vancouver basis 30-45 days forward, spanning Oct. 22-Nov. 6, was assessed unchanged at MIAX Hard Red Spring Wheat December (Z) futures plus 120 cents/bushel. CWRS Wheat 13.5% FOB Vancouver basis 45-60 days forward, spanning Nov. 6-Nov. 21, was assessed unchanged at Z plus 120 cents/bu,.CWRS Wheat 13.5% FOB Vancouver basis 60-75 days forward, spanning Nov. 21-Dec. 6 was assessed 10 cents higher at Z plus 130 cents/bu.