Asia’s buyers target 330k mt Black Sea wheat spree as prices tumble

Asia’s end users have targeted milling wheat and feed wheat purchases from the Black Sea region, as they look to capitalise on lower prices ahead of the arrival of a big wheat crop expected in both Ukraine and Russia.

The buying amounts to at least 330,000 mt across both milling and feed wheat.

Market sources reported two trades of 55,000 mt feed wheat to the Philippines, one at $197/mt and another at $198.75/mt for July-August shipment, both CFR Subic and reportedly sold by Midstar.

Indonesia also bought a 30,000 mt cargo of likely milling wheat from the Black Sea for August loading at $210/mt CFR.

Rumours in the market also suggested that a deal had been signed for Black Sea feed wheat to head to Vietnam at $205/mt CFR for July-August shipment, but details could not be confirmed.

South Korea's MFG also got in on the action, buying two 65,000 mt feed wheat cargoes for October shipment on May 8, at average of $204.5/mt CFR, with fellow NOFI announcing a tender for 60,000 mt second half September-early October shipment.

Glencore is believed to have sold the tender at $200.99/mt CFR for one port discharge, with the buying underlining the South Korean feed sector’s interest in wheat at the expense of corn.

Prices for next crop feed wheat have fallen by around $3/mt in the last two weeks, as the expected size of the new crop has put pressure on them, and now old crop corn and new crop feed wheat are offered at the same level.

Market sources said that they expect the price to come down further, but at the same time Asia’s buyers have taken a chance to buy cargoes at the current prices.

“Even if the outlook is bearish, they (Asia’s buyers) need to start covering at least a small portion to reduce their exposure”, a trader said.

Ukraine and Russia are both expecting high wheat production this season, amid favourable weather, with Ukraine's wheat production estimated in the range of 25.3 million to 28 million mt.

Russia’s production meanwhile is expected in the range of 79 million to 83.4 million mt, according to analytical agencies.

The two countries harvested 24.5 million mt and 79.4 million mt respectively in the current marketing year.

With freight for a panamax-sized vessel from the Black Sea to the Philippines at around $30/mt, the FOB equivalent stands at around $168/mt FOB.

Agricensus  APM-1 assessment for Ukraine feed wheat stands at $169/mt for July and $167/mt for August.