Asian wheat buyers are likely to step up purchases in the weeks ahead on growing fears of higher prices after Russia's move to extend a ban on grain exports lifted US wheat futures for a third straight day. Flour millers in Asia have snapped up around 180,000 tonnes of Australian and US wheat cargoes in the past 10 days as buyers returned to the market after a month's hiatus, traders said on Friday.
"Buyers are jittery as prices are going up," said a trading manager with an international company that sells wheat into Asia. "You can't really say how much the market will go up because of Russia's extension of the ban, but mills are actively looking to book cargoes."
Benchmark Chicago Board of Trade wheat futures rose 0.7 percent on Friday, extending gains on expectations of higher demand for US wheat cargoes due to lack of supplies from the drought-stricken Black Sea region. Russia on Thursday signalled that it would extend the ban until late 2011 after the worst drought in years cut this year's grain harvest by around a third.
Flour mills in Indonesia, one of Asia's top wheat importers, this week bought 25,000 tonnes of Australian standard wheat at around $330 a tonne, including cost and freight, after last week taking 60,000 tonnes of Australian prime wheat at $303 a tonne, free on board.
Taiwan awarded a tender this week to import 48,000 tonnes of US wheat for November arrival, while Thailand took around 50,000 tonnes for shipment in October. Taiwan bought US dark northern spring wheat at around $390 a tonne FoB and paid $285 a tonne for soft white wheat. Mills in Malaysia and Vietnam are also in talks with international traders to sign deals to import wheat for the October-December quarter.
"We were expecting this to happen as some mills were running on thin stocks," said another Singapore-based trader. "They have been active since last week and we expect more deals to be signed in the coming days." Australian exporters said they expect strong demand well into 2011, given that the Russian ban will remain in force next year.
"With Russia's ban it may mean exports from Australia will be more evenly spread throughout the year as there will be no harvest pressure coming out of the northern hemisphere," said Tom Puddy, wheat marketing manager at Western Australian-based CBH Group, one of the country's largest grain exporters. "There won't be any pressure to get the grain out and capitalise on the higher prices before the northern hemisphere harvest."
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