ASIA WHEAT OCT ROUNDUP: Australian harvest kicks off; markets digest Trump win

Australian wheat prices were rangebound in October as price support from slow grower selling was balanced by bearish pressure from healthy early harvest yields.

Australian wheat rangebound, early harvest yields decent

Australian wheat prices were at $262/mt and $252/mt for Australian Premium White and Australian Standard White Oct. 30, according to Platts data from S&P Global Commodity Insights.

The average assessments for APW and ASW FOB Kwinana were seen at $264/mt and $252/mt in October, $3/mt and $1/mt firmer than the average in September, respectively.Prices had firmed in the middle of the month on poor weather, though healthy early wheat yields, strong competition from Argentinian supply and pressure from offshore futures soon pushed prices down.

Market sources have continued to monitor developments around the GrainCorp workers' strike in New South Wales. The earlier wage package negotiations between GrainCorp and some 200 workers from the Australian Workers' Union had broken down, and industrial action was expected as early as Oct. 29. When approached by S&P Global Commodity Insights late last month, both parties expressed a desire to resume negotiations, though a meeting date had not yet been set at the time of writing.

Rains between early and mid-October improved sentiment regarding Western Australia crop output, and most participants agreed with the Grain Industry Association of Western Australia's upward revision of the wheat crop output to 9.9 million mt in its latest report, from 9.3 million mt in its September report.

Wheat harvest across the country is ramping up. Any significant wheat received activity in October was largely limited to Queensland, northern New South Wales and Geraldton in Western Australia. The harvest is expected to be in full swing by mid-November. Market feedback has suggested that yields of the harvested wheat thus far are fairly decent, and on the East Coast in particular, wheat crop conditions have been excellent.

"Yields everywhere are better than expected, even in southern New South Wales and Victoria," said a grains trader on the East Coast. "We are looking at a [national] crop bigger than 30 million mt, for sure."

Other market sources in Australia said early indications from the harvest were suggesting a larger-than-expected crop size, though many were still waiting for more harvest activity before revising national crop size estimates above 30 million mt. Crop quality was also on the minds of many sources.

"There is a lot of low-protein wheat coming into WA at the early stage of the harvest," said a grains trader based in Western Australia. Another trade source observed higher-than-expected screenings in parts of Geraldton and Kwinana. While not overly concerning at this stage of the harvest, if the trend continues southward, the state could see a substantial volume of wheat rendered for animal feeding.

Taiwan, South Korea return for milling wheat

Buyers in North Asia capitalized on falling Canadian and US wheat prices due to declines in offshore futures, with Taiwan and South Korea returning to the market for milling wheat in October.

Meanwhile, offers for Australian and South American milling wheat were converging in the $270s/mt CFR range on a delivered basis to Southeast Asia. While lower than levels in September, buyer coverage continued to remain slow amid widespread anticipation of price falls induced by harvest pressure.

A slide in feed corn prices between early to mid-October did not incentivize feed millers to switch to feed wheat. Inquiries for Australian feed wheat largely emerged from buyers with inelastic demand, such as the Philippines and Japan. "We are looking for February cargoes, but there are little indications to work with [in October]," said a Japanese buyer.

The most competitive origin for feed wheat is currently Brazil, with offers heard around $260/mt CFR or lower into Asia, though several sources said Brazilian feed wheat still has limited acceptance in the region due to looser vomitoxin restrictions.

Meanwhile, following months of anticipation, China returned to the market to import bulk wheat from Canada and Australia, though the move did little to stimulate global wheat prices.

Market participants in Australia were not surprised by China's purchases and said the coverage was already later than usual for new-crop Australian wheat, and there were still concerns that China could import less wheat from Australia in 2025 than during prior years.

Feed barley continued to trade to China despite talks of import controls in August, with some Australian market participants estimating that as much as 750,000 mt of feed barley traded from then till late October, mostly out of Western Australia.

What's next in Asian wheat markets?

• Market sources are now digesting the impact of Donald Trump's presidential election victory on wheat prices. The US Dollar index has jumped 1.3% since Nov. 4, and while a stronger index typically corresponds to lower commodity prices on derivatives markets, sources in Asia said the weakening of their currencies against the US dollar could create a difficult environment for them to trade in.
• Ahead of an earlier Lunar New Year in January, it remains to be seen if China and Southeast Asian countries will pay up to secure supplies ahead of the festival season if prices do not ease to desirable buying levels.