By Naveen Thukral
SINGAPORE, Nov 23 (Reuters) – Early harvest results for Australia’s near record wheat crop are showing lower-than-expected protein levels, raising concerns over supplies to a market already suffering shortfalls from key Northern Hemisphere exporters.
Australia is expected to be a key wheat exporter in the 2021-22 season, but heavy rains hampered harvesting in some areas and caused some crop deterioration, analysts and traders said.
“In Western Australia this year, nearly half of the crop is standard white wheat,” said Ole Houe, director of advisory services at brokerage IKON Commodities in Sydney. “In a normal year, average standard wheat is just 25% of the overall output.”
Australian Premium White (APW) wheat – popular among Asian millers – has 10.5% protein, while Australian Standard White (ASW) wheat has below 9% protein.
Australian forecasters upgraded wheat production targets to 32.6 million tonnes for the season ending June 30, 2022, which would make it second only to last season’s record output.
Wheat importers, especially in Asia, were looking forward to a bumper Australian crop to replenish supplies left short by export curbs in the Black Sea region.
However, the lower protein values are now raising fresh concerns about the volumes of high quality wheat from Australia.
“Traders have sold higher quality milling wheat to buyers but we are seeing more lower protein wheat as harvest starts in Australia,” said one Singapore-based trader. “Many suppliers are now caught short on milling wheat sales.”
Lower milling wheat output in Australia is likely to result in higher demand for supplies from the United States and Canada, further underpinning global prices that have scaled 9-year highs this week.
“People are running to get APW, and prices of this variety are going up,” said a second Singapore-based trader.
APW wheat is quoted at an all-time high of $365 a tonne, Free on Board (FoB) Western Australia, up from $340 a tonne few weeks ago, while ASW is selling for $325 a tonne.
“The spread between the two varieties is typically $10 a tonne, but it has widened in the last 10 days,” he said.
Australia wheat prices diverge as early harvest results raise concerns about protein levelshttps://tmsnrt.rs/3xekU3w
Global benchmark wheat futures scale 9-year highs as supply worries mounthttps://tmsnrt.rs/3cCp9wD
(Reporting by Naveen Thukral; Editing by Simon Cameron-Moore)
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