Indonesian flour mills bought 150,000 tonnes of Australia milling wheat this week for April-May shipment, while most Asian grain buyers stayed on the sidelines, expecting prices to decline further following losses in the US futures market. US wheat prices dipped in Asian trade, tracking decline on the benchmark Chicago Board of Trade (CBOT), but losses in Australia's cash market were limited by tight supplies of high quality wheat and strong demand.
"Indonesia was in the market but most buyers in Asia are not in a hurry as they are covered until May and some have even bought until June," said a trading manager with an international trading company in Singapore. "I think buyers expect further correction in wheat prices after they saw the market move lower this week." The CBOT front-month wheat contract fell more than 8 percent this week, suffering its biggest weekly losses since October as political upheaval in Libya triggered an investor stampede to safer markets.
This was reflected in the cash market, with the offer price for US dark northern spring wheat falling to $490 a tonne, including cost and freight (C&F), a decline of around $30 to $35 a tonne, regional traders said. Similarly, hard red winter wheat was being offered near $400 a tonne and soft white wheat quoted around $365 a tonne. But the cash market in Australia fell only marginally as tight supply of high quality wheat amid strong global demand kept a floor under prices.
Australia prime wheat was quoted at $405 a tonne, C&F, a decline of around $10 to $15, while Australia standard wheat was selling around $365 a tonne. "Top quality Australian wheat is in short supply and too many buyers are chasing it," said another Singapore-based trader. "We expect prices to remain firm." Excessive rains and floods damaged Australia's wheat crop when it was ready for harvest in December. Around half of the country's 2011 crop of 22 million to 26 million tonnes is likely to be downgraded to feed grade, much more than the 4 million tonnes of feed wheat a year it typically produces.
Traders said wheat exports from Pakistan, which has been aggressively selling cargoes into the Asian market, are likely to slow down following lower prices of US wheat. In the feed grain business, South Korea's Major Feedmill Group and members of the Korea Feed Association in Busan are jointly seeking 165,000 tonnes of soybean meal for arrivals between June and August via tenders, traders said on Friday. Separately, the (South) Korea Corn Processing Industry Association this week bought 55,000 tonnes of corn for May 25 arrival from Cargill via tender closed on Thursday.
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