Australia is expected to sell record volumes of feed wheat to China this year, with the world's third-largest exporter having abundant supplies at a time when China's wheat crop is being threatened by drought, traders said on Monday. Traders said Australian feed wheat was currently the cheapest in the world, selling at around $30 per tonne less than US corn which faces the tightest supply since the early 1930s.
"Trade talk is that China has bought between 300,000 tonnes and 500,000 tonnes and has shown further interest at lower prices," a Melbourne-based trader said. "It is going to be related to corn prices and how much they switch their coarse grain demand into feed wheat," the trader added.
The trader also said that China may buy up to 1 million tonnes of Australian feed wheat following nearly half the just completed 2010/11 harvest being downgraded to lower quality because of wet weather. China normally only buys quality wheat from Australia, but this year is seeking low grade feed wheat as US corn prices soar. The trader's estimates were supported by a Sydney-based trader who said flour mills throughout the world were also buying lower quality Australian wheat for blending purposes that would save them millions of dollars.
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