SINGAPORE: Asian flour millers are likely to increase wheat purchases from France and Romania in the new crop year starting July as supplies from key global exporter Ukraine remain cut off following the invasion by Russia, trade sources said.
World prices rallied to an all-time high in March after the Feb. 24 invasion. India’s subsequent move to curb wheat exports and adverse weather in the United States have heightened concerns over grain supplies.
“Going forward, buyers will have to look at alternative sources as we should forget about Ukrainian supplies for the next few years at least,” said one Singapore-based trader at an international trading company that supplies wheat to millers in Southeast Asia. “There is French and Romanian wheat being offered in the Asian market for the new season.”
The Chicago Board of Trade’s most-active wheat contract climbed to a record high of $13.64 a bushel in May, with prices rising around 35% in 2022. The market was trading down 1% at $10.39-1/2 a bushel as of 0406 GMT on Wednesday.
Russia’s war may deprive world of three Ukrainian wheat harvests
French wheat was quoted around $495 a tonne, including cost and freight (C&F) to Indonesia for August shipment as compared with $470-$480 a tonne, C&F, for Romanian wheat, traders said. Australian Premium White wheat is being quoted around $478 a tonne, C&F.
Australia, which has emerged as the world’s second largest wheat exporter this year following a record harvest, has been boosting sales to meet the global shortfall since the beginning of 2022.
“We think Australia will continue to ship large volumes of wheat, even after July, which is not its peak marketing season,” said a second grains trader in Singapore.
“But there are limits to what Australia can ship. I was told shipping slots out of Australia are fully booked right up to September.”
Australia produced a record crop of more than 36 million tonnes in 2021/22 and the country is poised for another bumper harvest on the back of near-perfect growing conditions.
Asian wheat importers have been operating hand-to-month, booking cargoes just one or two months in advance, hoping from supplies from the Black Sea region to resume.
The Russia-Ukraine war will create a global wheat shortage for at least three seasons by keeping much of the Ukrainian crop from markets, pushing prices to record levels, Ukraine’s agriculture minister told Reuters.
A senior government official said on Monday Ukraine’s grain harvest was likely to drop to around 48.5 million tonnes this year from 86 million tonnes last year.
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