Australia is wheat’s safe haven amid tensions in Eastern Europe

In Indonesia, the world’s second-largest wheat importer, wheat mills typically rely on Black Sea crops, particularly Ukrania wheat with an 11.5% protein concentration, to meet the demand for second-half shipments.

However, tensions in the Black Sea have led countries to purchase wheat from Australia due to concerns over conflicts erupting in Eastern Europe. “Buyers are starting to see Australia as a safe haven after July’s happenings,” said an Australian trader.

The Black Sea wheat market changed after the Russian government imposed taxes on grain exports in February 2021. Traders’ hesitation to enter the FOB market intensified as the prospect of Russia going to war with Ukraine became less remote.

Despite recent US government warnings about the risk of a conflict between Russia and Ukraine, market players in both European countries continued to trade ready-made cereals. Several clients, however, have reportedly pulled back to decrease their exposure without completely giving up.

Australia and China

This year, suppliers in Australia are also keen to compete with the new Black Sea crop as they seek to optimize their export program following a record harvest of 37 to 38 million tonnes in the 2021-22 marketing year.

Logistics difficulties in Australia add to buyers’ anxieties as delivery timetables for the next two to three months tighten. Due to a lack of competition, Asian buyers are jostling for Australian supply. Between October and December 2021, the country, the fifth-largest wheat exporter, shipped more than 5.3 million tonnes of wheat, a 58% increase over the same period in the previous business year.

This subtle upward trend in exports was driven by the supplies that carried over from the previous season, noting that new crops are usually accessible for shipping from December onwards. According to Chinese sources, Australia is projected to export 24 to 25 million tonnes of wheat this season, with China ordering approximately 5 million tonnes by May.

So far this season, China has proven to be the most prominent hub of Australian wheat demand, with 1.6 million tonnes exported between October and December 2021, followed by Indonesia with 680,000t.

This surge in Chinese demand has kept other Asian buyers on their toes as they had to book Australian wheat in advance to avoid supply shortages and eventually higher prices. As a result, the S&P Global Platts Australian Premium White Wheat Index has steadily risen since Jan.

Source: Canal Rural

Para ler o artigo original completo, acesse: https://www.canalrural.com.br/noticias/agricultura/australia-e-porto-seguro-de-trigo-em-meio-a-tensao-no-leste-europeu/

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