ASIA WHEAT SEPTEMBER ROUNDUP: Slow grower selling in Australia, Canada, lower European supplies support prices

Drier weather and frost events have weighed on market optimism regarding Australia’s wheat production in the coming season, pushing Australian prices higher, while most Asian buyers continue to defer coverage, expecting declining wheat prices once the Southern Hemisphere harvest pressure kicks in.

Australian wheat firms on poor weather prospects

In September, Australian wheat prices ended the month at $264/mt and $254/mt for Australian Premium White and Australian Standard White Sept. 30, according to the Platts assessments from S&P Global Commodity Insights. Both prices were higher compared to $259/mt and $249/mt Sept. 2, respectively.

The average assessment for APW and ASW FOB Kwinana were seen at $261/mt and $251/mt in September, $1/mt and $4/mt lower than the average in August, respectively. Prices firmed throughout the month as farmer selling remained thin amid poor weather.

Patchy rainfall throughout September has weighed on market expectations of the 2024-25 marketing year (October to September) crop size.

Most participants noted that crop conditions and yields were expected to be poor in South Australia and Victoria due to persistent dryness and frost damages sustained between early to mid-September, though the extent of damages will only be known closer to harvest.

Industry associations such as the Grain Industry Association of Western Australia and the Department of Primary Industries and Regions of South Australia had lowered wheat production estimates in their respective states as per the latest reports. GIWA revised wheat production down 7% to 9.3 million metric tons while PIRSA slashed its estimates by 26% to 3.2 million t compared to last reports.

Trade estimates of the national crop size have moved lower to around 30 MMt to 31 MMt and many sources have highlighted downside potential without further rainfall in coming weeks.

“A few months ago, we were expecting a bigger crop with a lower protein profile, but with the dry finish, it seems we’ll get some boost in crop protein levels, but yields will fall,” said a trade source based in Melbourne.

Thailand steps up feed wheat coverage

Milling wheat coverage remained hand-to-mouth across most of Asia, as global wheat prices remained supported from a declining supply in the Northern Hemisphere and lack of old crop availability from Australia.

Buyers continued to find new-crop Australian wheat offers too expensive for their liking. Sources reported several trades of Black Sea milling wheat to complete October and November shipment coverage, as well as building interest for Argentinian milling wheat for later laycans.

“Most of the buyer enquiries for South American wheat are just price checking activities. They are not yet ready to commit to December to January shipments,” said a grains trader based in Singapore.

Canadian Western Red Spring wheat prices were attractive to buyers in the region, with buyers perceiving the $10/mt premium above Australian Hard 2 wheat as value for money considering the former’s higher protein content.

However, offer liquidity for Canadian wheat was also thin, hampered by slow farmer selling for new crop and potentially by uncertainties surrounding Vancouver port strike negotiations late September.

Feed wheat trades picked up in September. Buyers in the Philippines capitalized on cheaper Australian offers at the start of the month but are now on the sidelines following the rise in Australian values.

Thailand, on the other hand, saw a surge in demand, with multiple buyers entering the market between late September and early October to cover fourth-quarter shipments. Notably, Thai feed buyers are generally paying more for their cargoes, especially on prompt shipment cargoes, as the shipment window limits available origins to the Northern Hemisphere, where feed wheat supply is running dry.

“There are also rumors going around in Thailand that the carryover quotas for feed wheat from previous years might not be rolled over to January, so buyers are not wanting to take a chance and are buying spot shipment to ensure the wheat arrives before December,” said a Singapore-based grains trader.

What’s next in Asian wheat markets?

• Feed wheat coverage activity is expected to continue in Thailand in October. Other feed buyers in the region are likely to remain sidelined until there is a decline in prices, though many will keep an eye on the conflict escalation between Iran and Israel and the potential impact on global wheat prices.
• Participants are expected to reduce their wheat production forecasts below 30 MMt for Australia in coming weeks if rainfall remains patchy or absent.