Markets

Feed wheat to Korea signals relative value in Australian origin

Liz Wells and Henry Wells, July 2, 2021

Quattro’s facility at Port Kembla. Photo: File

A CARGO of New South Wales feed wheat on its way to South Korea is an encouraging sign that Australian-origin grain remains competitively export priced into the closing months of the Australian marketing year.

The 50,000t parcel is the first bulk cargo of Australian wheat to be sold by ETG Commodities, and left the Quattro terminal at Port Kembla yesterday.

Booked in February, and with cheap basis as the catalyst for this business, the cargo has an average protein of around 11 per cent.

“Australian wheat this year has shipped well into African and Middle Eastern destinations not normally seen here,” ETG Commodities trading manager Matthew Pattison said.

“It’s a symptom of how expensive corn became, and how comparatively cheap Australian wheat is.”

Road and rail shared the task of bringing the ETG grain into the Quattro terminal.

South Korea buys almost 12 million tonnes (Mt) of corn per year as a feed ingredient, and also purchases about 5Mt wheat, primarily for milling into flour.

In recent decades it has consistently been one of the biggest markets for US corn, and is also a major buyer of corn from Argentina and Brazil.

With Chinese demand driving up the world price of corn, feed wheat from origins including Australia has picked up some extra demand.

For Australia, this has been fortunate in helping it to shift the massive 2020-21 crop and there will be further opportunity to price during 2021-22.

Flexi Grain pool manager Sam Roache said Australian feed wheat was very competitive into Asia for April through to July shipping versus both corn and competing lower-grade wheat.

“We are seeing Black Sea new-crop feed wheat begin to take that market now for July-August forward, and this will continue until Australian new crop where Australia will begin to compete again,” Mr Roache said.

Reports say Black Sea feed wheat was offered at the equivalent of US$230 per tonne fob into the recent Thai tender, which is US$50/t below the Australian market.

“That out-competes us, even with the significant freight advantage we hold today.

“The big Black Sea-EU crop, along with some traders expecting feed wheat production, has that market heading south and front-running harvest pressure.

“I would say that Australia doesn’t have much feed wheat or low-grade stock left to sell, and also that the global high-protein market is strengthening.

“This should support export demand for the carry-out stocks Australia has remaining and, all going well, the high-protein production from another big NSW crop, pending rainfall and harvest quality.”

 

 

 

Grain Central: Get our free daily cropping news straight to your inbox – Click here

 

HAVE YOUR SAY

Your email address will not be published.

Your comment will not appear until it has been moderated.
Contributions that contravene our Comments Policy will not be published.

Comments

Get Grain Central's news headlines emailed to you -
FREE!