Australia losing share of global wheat market

Grain Brokers Australia September 10, 2019

Australian grain exporters have relied heavily on Western Australian grain to supply markets. Photo: Dana Fairhead, Esperance

THE Australian Bureau of Statistics released its July export data last week, and the grain numbers undoubtedly reflect the effects of last year’s drought and the many dilemmas for Australian exporters this year.

Wheat exports for July came in at 737,000 tonnes. This was up from the June number of just 585,000t, but well down on the 1.227 million tonnes (Mt) exported in May, the biggest wheat export month of the marketing season which ran from October 2018 to August 2019.

Not surprisingly, Western Australia and South Australia accounted for almost the entire volume, shipping 494,000t and 216,000t respectively.

The balance of 27,000t was container shipments from eastern Australian ports in Queensland, New South Wales and Victoria.

In terms of destinations, Yemen, Vietnam and Japan were the biggest in July taking 113,000t, 109,000t and 83,000t respectively.

In June, it was The Philippines, followed by South Korea and Japan with 216,000t, 86,000t and 81,000t respectively.

Year-to-date wheat exports now stand 7.457Mt with 57 per cent, or 5.286Mt, shipped in January-June 2019.

WA made up the lion’s share of Australia’s wheat production last year, and at a pinch under 6Mt, the state has accounted for more than 80pc of national wheat exports in the period which ended last month.

SA wheat shipments stand at 1.102Mt since the beginning of October last year, or around 15pc of national wheat exports.

Total east-coast wheat exports for the marketing year stand at just 355,000t. The majority of that volume went out in containers, with Victoria accounting for 194,000t, New South Wales 102,000t and Queensland 60,000t.

China features in barley

Exports of barley in July totalled 209,000t, almost double the June shipments 113,000t, with WA making up more than 99pc of that volume.

Malting barley made up 39pc of the July exports, and feed barley made up 61pc.

Japan was the biggest importer of Australia barley in July with 105,000t shipped, followed by China at 62,000t.

This was the opposite of June, where China was the primary destination at 53,000t, followed by Japan on 51,000t.

Total exports of barley for the 2018/19 marketing year stand at a healthy 3.459Mt.

December 2018 is the biggest month thus far at 1.107Mt, more than double the next closest month. The split between malting barley and feed barley is almost equal with 1.751Mt exported as malting and 1.708Mt exported as feed.

WA has exported 3.143Mt of barley this season, almost 91pc of total Australian barley exports.

At 279,000t SA exports make up most of the balance, and Victoria has chimed in with 37,000t of containerised trade.

Interestingly, China has been the biggest destination for Australia barley in the October 2018 to July 2019 window, and has taken 2.231Mt, or almost 71pc of total Australian barley trade to international clients.

This is despite the ongoing anti-dumping investigation, which appears no closer to a resolution.

The investigation commenced in November last year, and the final decision of the 12-month inquiry is due in November this year.

However, Beijing can extend its investigation by a further six months to May 2020 if it feels it is required.

While the potential outcomes remain uncertain, it appears the Chinese Government has its hands full on other fronts, and is happy to let market speculation and confusion reign in the Australian market until a decision is announced.

Canola, sorghum slow

On the canola front, July exports totalled 39,000t, with one 33,000t cargo loaded out of Western Australia and small parcels of container business out of both Victoria and SA.

Marketing-season canola exports currently total 1.447Mt, with 79pc shipped from WA ports and 14pc from SA ports. The balance of 7pc, or 95,000t, was exported from Victoria, with one bulk vessel in March and the rest via container trade across the season.

With a run of poor sorghum crops in Queensland and northern NSW, sorghum exports totalled a paltry 62,000t for the first 10 months of the marketing season.

This is well behind last year and a long way short of the record 1.6Mt exported in 2013/14.

Impact on customers

Last year may have been bad, but this season’s production outlook is not looking any better as the late winter dry continues into the spring.

There are good pockets in most states, but widespread rains are required now, and then follow-up falls for at least the next month to arrest the deterioration.

Australia has lost significant market share and relevance as a global wheat exporter as a result of last year’s drought, and the considerable fall in the continent’s exportable surplus.

A repeat of last year is a free leg-up for the likes of Argentina and Black Sea origins, which have filled the void for Australia’s traditional Asian wheat consumers.

We have even seen export values out of both regions fall in recent weeks as the plight of the 2019 Australian harvest gets factored into global supply-and-demand calculations.

One thing is for sure: winning back that business in the face of similar competition will not be easy when Australian production recovers.

This article was written by Grain Brokers Australia


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