Export

Wheat export struggles amid competition headwinds: ABS

Liz Wells and Henry Wells, June 11, 2019

LEGACY prices from the drought are hurting Australia’s wheat export as traders struggle to win business in key consumer markets.  April 2019 wheat exports published by the Australian Bureau of Statistics reported 743,984 tonnes (t) bulk and 86,336t containerised, making total 830,320t Australian wheat shipped in April, lower than the previous two months.

“Wheat container exports for April, at 86,336t, continue the trend of running at just above 40 per cent of the five-year average,” Market Check head of markets Nick Crundall said.

“Western Australia and South Australia remain the key states for container exports, making up 75pc of April export volume. This is not surprising though given the relative seasons between WA/SA and the eastern states.”

Bulk shipments pattern

“While the headline number for April was largely within expectation, digging into the data reveals the same pattern we’ve been seeing each month of this season.

“Western Australia has shouldered most of the export task, accounting for 75pc of overall volumes.

“Korea, Vietnam, The Philippines and Japan remain the stalwarts of our export program this year, with these three destinations accounting for 55 per cent of our total exports between October and April.”

But the detail of destinations taking Australia’s wheat this year is cause for concern because fresh business is hard to get booked, especially with price-sensitive customers in an extremely competitive global wheat market.

“In terms of destinations, we continue to see exports to Indonesia disappoint as they shift more and more to Black Sea/South American origin,” Mr Crundall said.

“To provide some context, if Indonesian exports don’t improve relative to other destinations before September 30th, 2018-19 will be the first season in 16 years that Indonesia wasn’t our biggest customer. “

Australia’s price competitiveness actually improved in the past month or two because its basis dropped.  United States wheat futures trended lower over February and early March, then when futures began to rise Australia’s basis gradually halved, which would open the prospect of fresh export sales.  To some limited extent that has turned the ship around.

Market analyst, Lachstock Consulting, said in its May wheat update the pace of exports had picked up in WA, though not sufficiently to meet target levels.

A temporary pick-up would be fortuitous because there’s usually a seasonal price inverse occurring in August and September as northern hemisphere new crop begin to ship, and Australia would expect its monthly export to drop during that time this year to 700,000t per month.

In the meantime April/July monthly shipments in the order of 850-900,000t would be necessary, it said.

Table 1 and Table 2 contain April wheat shipments by destination, along with February and March, for bulk and containerised exports.

BULK Feb Mar Apr Tonnes
Fiji 0 0 38909 38909
Indonesia 85594 93920 42024 221537
Japan 110772 76107 35070 221948
Korea 150150 143640 61600 355390
Kuwait 42029 46000 47026 135055
Malaysia 81875 0 26678 108554
New Zealand 27130 0 71379 98509
Oman 16500 33000 0 49500
Papua New Guinea 18000 35600 0 53600
Philippines 152582 235550 142041 530173
Singapore 0 0 18460 18460
Sri Lanka 248 0 1336 1584
Thailand 19541 0 55000 74541
UAE 0 22000 0 22000
Vietnam 0 58850 148711 207561
Yemen 48000 111375 55750 215125
TOTAL 752420 856042 743984 2352446

Table 1: ABS bulk wheat export data for Australia’s February, March and April 2019 shipments.

BOXED Feb Mar Apr Total
Cambodia 0 0 3 3
China 0 5417 19330 24747
Egypt 350 1852 3059 5261
Fiji 2302 3334 2926 8561
Hong Kong 0 24 0 24
India 0 499 0 499
Indonesia 1510 1334 1293 4138
Japan 410 380 0 790
Korea 520 63 0 582
Malaysia 17935 17322 16477 51735
Myanmar 22503 19741 7120 49365
New Caledonia 1598 1833 951 4381
New Zealand 3807 3289 2680 9776
Papua New Guinea 43 0 589 632
Philippines 4424 7965 4672 17061
Saudi Arabia 500 0 374 873
Singapore 1517 986 550 3052
Solomon Islands 750 2502 1251 4503
Sri Lanka 2057 0 0 2057
Taiwan 3704 5403 3341 12447
Thailand 13569 10733 11879 36181
UAE 137 56 55 248
United Kingdom 666 560 1156 2382
Vietnam 2885 10849 8634 22368
TONNES 81188 94142 86336 261666

Table 2: ABS containerised wheat export data for Australia’s February, March and April 2019 shipments.

Source: ABS

 

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