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China has continued to turn to Australia while it scours the market for high-protein wheat, with that source the most competitive despite approaching the end of the marketing year when supply is typically tight and prices high.
But record-breaking summer temperatures across North America have led to drought conditions in Canada and the US, raising fears over supply and pushing those supply sources out of the competition.
Trade sources have reported firm interest for Australian high-protein wheat (APH) from China for September-October dates, with some transactions said to have been concluded.
That comes despite very strong Australian exports this marketing year, breaking records in some months and draining the volumes left for export on these dates, which are among the last months of the 2020-21 local marketing year.
At the same time, the September-October period is usually when new crop supply from the US and Canada starts to heavily arrive in the market, depressing prices.
But both countries are facing hot and dry weather that has already affected crop conditions and raised fears over the expected size of supply and quality.
That, in turn, has pushed prices up.
“China should book all the available APH13 [Australian high-protein wheat with a minimum protein content of 13%] because of US and Canada high-protein spring wheat problems,” a broker said.
At least one trade for APH was recently reported at $295 per tonne fob East Coast for September, while more trades were done in late June and early July for August-October dates.
Canadian 13.5% No2 Canada Western Red Spring (CWRS2) offers for August-September were said to be around $340-345 per tonne fob Vancouver and US northern spring or dark northern spring at around $362 per tonne fob Pacific Northwest.
“I think they are generally short and have been trying not to buy and have been trying to push prices down, but demand is still there and global prices are not doing what they want, so they have to step in,” a trade source based in Australia said.
This article, by Masha Belikova, was first published to agricensus.com on Friday July 2.