Heavy rains boosted Australian wheat production, allowing it to sell the crop as far as North Africa and Europe.
From mounting tensions with China to trade disruptions caused by the pandemic, Australian agriculture has been hit by a few curved bullets in recent months. Yet for wheat growers, the outlook has rarely been better.
Australia is one of the world’s largest exporters of the ubiquitous staple food used in everything from bread to cakes and pasta, and this year the country is on track for its second largest harvest ever. recorded – over 30 million tonnes – after widespread rains.
According to Andrew Whitelaw, agricultural analyst at Thomas Elder Markets, major buyers in the region – including Indonesia, Thailand and Vietnam – are expected to return to Australia, according to Andrew Whitelaw, agricultural analyst at Thomas Elder Markets. in Melbourne.
“In recent years, we haven’t had the volumes to meet demand from Southeast Asia,” Whitelaw said. “Not only do we have a bumper crop, but we also have the potential for crop failures” in other parts of the world, he said.
With dry weather hurting key growing regions in the northern hemisphere, tighter global supplies are helping Australia’s case. “If things stay bad in Russia, then we are talking about a shrinking crop,” Whitelaw said. This then creates an obligation for the wheat to go to major importers in North Africa and the Middle East, he said.
These are markets traditionally supplied by Russia and Europe, and Australia does not normally sell there due to freight charges. Russia has also now imposed taxes on exports to protect domestic supplies. “The wheat market is based on prices all over the world. Right now we have extremely cheap wheat, ”Whitelaw said.
While the wheat industry appears to have avoided a major public blow to tensions between Beijing and Canberra, there are signs beneath the surface. China bought just 888 tonnes from Australia in November, the lowest since 2011, according to customs data compiled by Bloomberg. Still, Australia’s apparent new dominance in the global market could help soften the shock.
Transporting such a large volume of grain this year can pose challenges. Increased capacity could mean traders are less willing to buy grain in the shorter term, if plentiful supplies are available downstream, Whitelaw said. Good humor can spread to the next harvest due to improved soil moisture. “I actually don’t see a lot of headwinds at the moment,” he said.