Asian flour millers are likely to step up purchases as global wheat supplies are forecast to tighten in the months ahead, with dry weather reducing production in some key exporting countries.
Wheat importers, including from Indonesia, the world’s No. 2 buyer, and China were actively seeking cargoes this week for shipment in December and early 2023, three trade sources said.
“There are expectations that prices have bottomed out and the market will rise from the current levels as Australia, Argentina and Canada are facing adverse weather,” said one Singapore-based trader at an international trading company, which sells Australian and Black Sea cargoes in Asia.
“Supplies are going to be much tighter at the end of this year and early next year as compared with what we have seen in the last six months,” the trader said.
Benchmark Chicago Board of Trade (CBOT) wheat futures Wv1, which dropped to a three-year low last week, have started firming. The market is up almost 5% this week.
In the physical market, Australian Premium White (APW) wheat was quoted at $320 per metric ton, including cost and freight (C&F) to Indonesia, for December-January shipment, up from $315 a ton last week.
Wheat from the Black Sea region with 11.5% protein content was offered at $290 a ton, C&F, compared with $275 per ton a week ago, traders said.
“We are seeing improved buying interest,” said a second trader in Singapore at a company which supplies wheat to China among other countries. “This is likely to continue and we expect demand to rise in the next few weeks.”
Asian wheat buyers have been making last-minute purchases, buying cargoes just a few months in advance since the beginning of this year amid ample world supplies.
Australia reduced its wheat production estimate last month and the world’s second-largest exporter could see further crop losses after hot and dry September weather.
Argentina’s agricultural heartland soon to avoid wheat productivity losses and finish planting early season corn, after showers last week failed to quench parched farmlands, the Rosario grains exchange said on Wednesday.
U.S. winter wheat was being offered at $330-$335 a ton, C&F, soft white wheat at $310-$315 a ton and spring wheat at $365-$370 a ton to Asia, traders said.