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Asia sticks with Argentina for Q1 wheat supply as Australian output shrinks | Libertad y Progreso in English

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Asia sticks with Argentina for Q1 wheat supply as Australian output shrinks

November 28, 2019 1:40 pm A+ / A-

SINGAPORE, Nov 21 (Reuters) – Argentina is set to dominate Asia’s grain market for a second consecutive year in 2020, with trading companies already buying significant volumes anticipating first-quarter demand in the region as drought curbs output in traditional export powerhouse Australia, trade sources said.

Wheat exports from the South American nation to key importers like Indonesia, the world’s second-largest wheat buyer, Bangladesh, Malaysia and Vietnam have jumped to record levels in the course of the past 12 months, boosted by bumper harvests.

With shipments accounting for more than 30% of the global trade, Asia is the world’s biggest wheat consumer and importer making its purchasing patterns must-read trends for the industry.

“Early next year, we expect large volumes of wheat shipments to come from Argentina … Australia doesn’t have much to sell,” said one official at an international trading company in Singapore.

“Most millers are okay with the quality of Argentinean wheat and the volumes will be similar to last year, if not more,” he said. The trader declined to be identified as he was not authorised to speak to media.

The latest estimate for Argentina’s 2019/20 wheat harvest is 18.5 million tonnes, the Buenos Aires Grains Exchange said in a report last week, slightly down from a previous forecast of 18.8 million tonnes due to an outbreak of harmful fungi.

That still leaves the country with a surplus of around 12 million tonnes in 2019/20, trade sources said.

A second trader said Argentine farmers have already sold close to 8 million tonnes of wheat to trading companies for export, the bulk of which is expected to land in Asia.

“Millers in North Africa and the Middle East are likely to stick to the Black Sea region or switch to French wheat,” said the trader, who spoke on condition of anonymity as he was not authorised to speak to media. “Asians will go for Argentinean wheat.”

Argentina was the top supplier of wheat to Indonesia between January-June this year, with more than 30% market share, according to the two traders, who actively sell wheat to mills in the Southeast Asian country.

Indonesia imported around 1.9 million tonnes of wheat from Argentina in January-June, according to Refinitiv Eikon ship-tracking data. Traders said this dwarfs shipments of less than 700,000 tonnes in all of 2018, and around 150,000 tonnes in 2017.

Brokerage INTL FCStone said its poll of clients pegged Australian wheat production at 15.54 million tonnes for the 20109/20 season, 19% below Australia’s official estimate of 19.2 million tonnes. That’s down from record production of close to 32 million tonnes in 2016/17.

“We will likely have about 7-8 million tonnes of wheat to export over 10 months, which is not much for Australia,” said Ole Houe, director of advisory services at brokerage IKON Commodities in Sydney.

Argentinean wheat is being offered around $232 a tonne, including cost and freight (C&F) for December shipment, compared with similar quality Black Sea wheat at around $240 a tonne and Australian wheat at $250 a tonne, traders said.

Reporting by Naveen Thukral Editing by Kenneth Maxwell

Asia sticks with Argentina for Q1 wheat supply as Australian output shrinks Reviewed by on . SINGAPORE, Nov 21 (Reuters) - Argentina is set to dominate Asia’s grain market for a second consecutive year in 2020, with trading companies already buying sign SINGAPORE, Nov 21 (Reuters) - Argentina is set to dominate Asia’s grain market for a second consecutive year in 2020, with trading companies already buying sign Rating: 0

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