Importers throw nets for wheat supply | Queensland Country Life

Global wheat supplies remain fluctuating as the northern hemisphere harvest comes to an end. We were used to seeing production estimates drop in a number of countries, but this week we saw a forecaster slightly increase the Russian crop due to better spring wheat yields in Siberia.

The market is also counting on a large Australian harvest to ease supply issues. While we are expecting a big harvest, the frost has been removed by frost in WA and a dry spring to date in many parts of the country.

At the same time, China has stepped up its purchases of Australian wheat. They are canceling French wheat orders due to quality issues and turning to us for replacement shipments.

One estimate is that they bought up to 2 million tonnes, out of the farmers’ total sales of new season wheat of about 5 million tonnes.

A mix of quality issues and small harvests will disrupt the normal flow of wheat from exporters to importers this year. We may also add expensive bulk shipping freight rates. Overall, importers will look for wheat of different origins than one would expect in a more normal year.

This will leave Australia in a good position to complete its second major harvest in a row, but we will face our own logistical challenges to ensure grain is in an export position, against shipping slots that will be heavily booked. .

Interestingly, Australian farmers may have already sold up to 20 percent of our projected exportable surplus. These are grains for which our trade will not have to fight to meet the first shipping commitments.

With very high wheat prices, we can also expect producers to make sales from the header, thus increasing supplies to which exporters will have easy access.

With a bountiful harvest and high prices, a lot of capital will be tied up in holding grain. Interest rates are low, but there is always a limit to how much capital the business will have to hold inventory.

If the trade has good coverage and does not need to fight for grain when it is needed, and if capital resources become strained, the appetite of buyers to continue to accumulate grain may decrease over time. as the harvest progresses.

This is probably why some are suggesting that wheat prices may drop once our harvest begins. This may apply to our domestic market, but our large harvest can also put pressure on the world market if it is seen to fill some of the quality and supply gaps left by other exporters.

The story Importers cast nets for wheat supply first appeared on Online farm.

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