Asian wheat demand supports high-price markets

Asian demand continued to support prices in North American markets, as buyers unable to wait for Australia’s new crop stepped in for expensive alternatives.

Canadian Western Red Spring (CWRS) 13.5pc wheat was understood to have traded in the latest tender held by Japan’s Maff at 95¢/bu over the Minneapolis-listed March futures contract, within fob Vancouver market levels. Maff allocated over two-fifths of the 155,000t sought under the tender to CWRS wheat, with the volume divided between January-February and March shipment, alongside US wheat.

But with the Australian harvest delayed and plentiful new-crop supply still slow to hit the market, Maff’s request for Australian Standard White (ASW) wheat from Western Australia was made for a later shipment date, in April.

There were also fresh reports of recent Canadian sales to China. Chinese buyers typically pay a premium to other destinations of around 20-25¢/bu in order to secure CWRS that meets strict specifications including a low ergot content, something that is in shortage this season.

China has in recent weeks paid a high price for wheat imported from other markets, too. It emerged in latest US trade data that 65,000t of US wheat had been sold to China in the final week of November. US prices are some of the highest in the market, with traditional buyers, such as Mexico and Brazil, switching to French and Russian wheat, respectively, in recent weeks.

Chinese buyers also last month secured almost half a million tonnes of French wheat for December shipment as China’s 2022 import quotas draw to a close.

But even if prompt Chinese demand is supporting higher-priced markets in the short term, some Canadian sellers have doubts over this continuing. Multiple Australian new-crop shipments bound for China were already appearing in the Australian vessel line-up on Thursday.

Furthermore, Canada has its own logistics challenges.

Latest data from the Canadian Grain Commission showed Canada’s wheat exports surged on the month in October, after soft wheat exports in September had already hit a 15-month high.

Combined exports across key crops were at the top of the long-term range in October, but could hit a ceiling given logistics. Market participants regularly find their activities frustrated by low availability of railcars to haul grain from elevators to ports. Grain transport prices are regulated in Canada, meaning that traders are often unable to compete for railcars with Canada’s other export industries.

Tags: China, grain, prices, Canada, wheat, USA, Australia