5-10-2023 (SINGAPORE) Flour millers in Asia are expected to ramp up their purchases as global wheat supplies are projected to tighten in the coming months, affected by dry weather conditions that have hampered production in key exporting countries.
Trade sources revealed that wheat importers, including major buyers like Indonesia (the world’s second-largest buyer) and China, have actively been seeking cargoes for shipment in December and early 2023.
“There are expectations that prices have reached their lowest point and the market will rebound due to adverse weather conditions in Australia, Argentina, and Canada,” stated a trader based in Singapore from an international trading company that sells Australian and Black Sea wheat in Asia.
The trader further added, “Supplies are expected to be much tighter towards the end of this year and the beginning of next year compared to the past six months.”
Chicago Board of Trade (CBOT) wheat futures, which hit a three-year low last week, have started to strengthen, with the market experiencing an almost 5% increase this week.
In the physical market, Australian Premium White (APW) wheat for December-January shipment was quoted at $320 per metric ton, including cost and freight (C&F) to Indonesia, compared to $315 per ton last week.
Traders reported that wheat from the Black Sea region, with 11.5% protein content, was offered at $290 per ton, C&F, up from $275 per ton a week ago.
“We are witnessing an improvement in buying interest,” stated a second trader in Singapore from a company that supplies wheat to China and other countries. “This trend is likely to continue, and we anticipate an increase in demand in the next few weeks.”
Asian wheat buyers have been making last-minute purchases, securing cargoes just a few months in advance since the beginning of this year, benefiting from abundant global supplies.
Australia recently lowered its wheat production estimate, and the world’s second-largest exporter could face further crop losses following hot and dry weather in September.
Argentina’s agricultural heartland is in need of more rain to prevent wheat productivity losses and complete early-season corn planting. Despite showers last week, the farmlands remain parched, as reported by the Rosario grains exchange on Wednesday.
Traders revealed that US winter wheat was being offered at $330-$335 per ton, C&F, soft white wheat at $310-$315 per ton, and spring wheat at $365-$370 per ton to Asia.
