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Australia wheat is set to land far beyond China as the Russian and European supply chains are taking a hit. Dry weather has hurt top growing regions in the northern hemisphere; however, the condition across Australia has been conducive with widespread rains.
Image Source: Megapixl
Australian Wheat Ready to Hit Grounds Far Beyond China
The favourable weather condition has been a major boost for the Australian agricultural products. Thanks to such conditions, wheat is all set for being the second-largest harvest with over 30 million tonnes of estimated production.
The increased production across the nation along with supply shortage in northern hemisphere means that top importers from southeast Asia such as Indonesia, Thailand, and Vietnam are once again looking back eyeing Australian wheat.
Dry Weather Across Northern Hemisphere – A Game Changer for the Continent
Furthermore, if the supply shortage across major producers such as Russia persists, the demand for the Australian wheat could further transcend among big importers such as North Africa and the middle East, market conventionally supplied by Russia.
Russia holds agriculture export control over these regions thanks to the cost advantage it has at its disposal against the Australia products, which face comparatively higher freight costs. However, at present, the wheat price across the globe is impacted by the international supply shortage. With the domestic supply shaping good, Australian wheat could hit ports far beyond China.
Coming back to the trade relationships between Beijing and Canberra, while the wheat industry did not see any major repercussions like wine and coal, there has been a silent discord over wheat trade, with China only importing just 888 tonnes from Australia in November 2020, marking the lowest level since 2011 (as per the data from the Bloomberg media).
Australia Missing on Chinese Buying Spree
At present, at least 750,000 mt of Australian feed wheat has been booked for December 2020 to April 2021 for shipment to Indonesia and the Philippines, up by 57 per cent as compared to the last year.
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Meanwhile, China has been buying grains aggressively to fulfil its commitment to the WTO while replenishing grain stocks for the rejuvenating stock of pig herd.
The total wheat export across China has been growing, Australia is estimated to contribute only 1.5 to 2.0 million mt in 2020-2021, missing on the Chinese grain-purchasing binge as trade relations between both the countries have soured with Australia supporting the international inquiry to China over the handling of the COVID-19 outbreak.
Australia typically fulfils around 15 per cent of the overall Chinese demand, however, the recent figures and the rising bitterness between Beijing and Canberra suggest that the wheat trade could go slow for a while.
But thanks to the overall supply shortage on the global front and surging prices in the international market, Australian wheat industry have a chance to flourish with due to lower prices, which should take some pressure off from the shoulders of the agricultural exporters.
