Asian flour millers are ready to buy in 2018 a record volume of wheat from producers of the Black Sea region, where Ukraine and Russia are the leaders, according to Reuters.
Australia – the traditional supplier of this culture to Asia – has experienced a severe drought this season, specialists explain such changes on the market.
In addition, traders note the continued growth in demand for wheat throughout the Asian region.
The growing appetites of Asia and the growth of wheat sales from the Black Sea region threaten to squeeze Australian dominance in this trade direction.
In addition, Asia is building up a middle class, which increasingly abandons rice, switching to noodles, pizza and cakes, the main raw material for which is wheat flour.
“Even large mills previously secured by Australian suppliers are now taking Black Sea cargo because of favorable prices,” said one of the market players in Singapore who asked to remain anonymous. “Wheat from Russia and Ukraine is getting better every year.”
Black Sea wheat with 11.5 percent protein is traded in the amount of $ 220-227 per ton, including cost and freight, compared to a similar grade of Australian wheat, which goes at $ 255-260 per ton.
Indonesia, according to traders, is ready to buy this season a record 12 million tons of wheat, and probably half of this import will have to Russia and Ukraine.
Thus, Indonesia will become the largest importer from the Black Sea region. It will be followed by Malaysia, Vietnam, India and Bangladesh.
Although the Australian grain was considered to be more quality, its production had already fallen in 2017 to a ten-year low of 21.2 million tons, increasing pressure on the export price.
The official forecast for 2018/19 is 23.7 million tons, but the spring drought does not allow to assume that the production will exceed 20 million tons.
In addition, most modern mills can mix lower quality grains with higher quality and get the right final product, according to the purchasing managers of the largest flour mills in Southeast Asia.