ASIA WHEAT NOV ROUNDUP: Rains hamper Australian harvest; strong corn prices boost feed wheat demand

Australian wheat prices were more volatile in November, as bearish pressure from competitive Argentine wheat prices and a lack of strong demand weighed on bullishness stemming from poor weather during the Australian harvest and lower-than-expected crop protein levels in Western Australia.

Rains hinder Australian wheat harvest

Platts assessed Australian Premium White wheat and Australian Standard White wheat at $262/mt and $248/mt, respectively, on Nov. 29, data from S&P Global Commodity Insights showed.

Rainfall in the latter half of November delayed fieldwork, particularly on the East Coast, as market participants await drier conditions to resume harvest and assess potential quality damage caused by the untimely rain.

The duration and intensity of the rainfall have heightened concerns about potentially severe quality damage to the crop.

"Mold and vomitoxin probably won't be real concerns, but it will be [issues with] test weight and falling numbers," a Victoria-based market source said, adding that crop protein levels were unlikely to be significantly impacted.

Western Australia also experienced rain-induced harvest delays; however, sources noted that lower rainfall levels compared with the East Coast, combined with warmer weather, are allowing fields to dry more quickly and the harvest to resume. Significant delays to the winter crop harvest are not anticipated in the state.

A start-stop harvest contributed to reduced offer liquidity toward the latter half of November, with ongoing uncertainty about the crop profile also cited as a contributing factor.

"We are about halfway through harvest in Western Australia, and so far, over half of the crop is of the Australian Standard White grade and below. Average protein [levels] seem to be lower than initial expectations, but as the harvest moves southward, we do expect to see higher protein [levels]," an Australia-based trade source said. "This has made it difficult to get clarity on prices and spreads."

"We are 65% through the wheat harvest in Western Australia and starting to see more lower-grade and off-spec wheat from growers," an Australian trade source said.

Rising corn prices spur feed wheat coverage

Harvest-induced price pressure in the Southern Hemisphere, coupled with rising feed corn prices in the first half of November, drove feed wheat coverage in Asia in early November.

Vietnamese buyers entered the market for Brazilian feed wheat, while feed millers in the Philippines increased coverage for their February shipment demand for Australian feed wheat. South Korean feed buyers, who had delayed purchases for weeks due to unsatisfactory prices, booked four feed wheat cargoes for late December to January shipments, most likely from US Pacific Northwest ports.

However, feed wheat demand tapered toward the latter half of the month as the feed wheat-corn spread widened amid falling corn prices. Market sources also noted a wait-and-see approach among buyers in the Philippines, who are anticipating further price declines for feed wheat following a rain-affected harvest on the East Coast.

Milling wheat demand was stable, with some millers, particularly in South Korea, capitalizing on currency fluctuations and bearish trends in the derivatives market following the US elections to purchase North American wheat.

Market participants noted that most millers in the region are well-covered ahead of the Lunar New Year holidays in January. Additionally, increasing offer liquidity and competitive prices for Argentine milling wheat have depressed demand for Australian milling wheat, with sources expecting the former to remain competitively priced in Southeast Asian markets at the start of 2025.

China continued to purchase wheat and barley from international markets in November for 2025 shipments, although its presence had minimal impact on global price movements.

A joint report by China's Ministry of Agriculture and Rural Affairs and the National Agro-Tech Extension and Service Center highlighted that major winter wheat-producing regions in the country had experienced ideal weather during the planting season. However, the report raised concerns about a high proportion of seedlings showing faster-than-ideal growth, which could increase the crops' susceptibility to cold damage during winter.

What is next in Asian wheat markets?

• Market sources are still waiting for harvest to resume on the East Coast to assess potential quality damage from the recent rainfall, which could turn a significant volume of milling-grade wheat into feed-grade qualities.
• With Argentine wheat imports to China now approved, the market will be closely monitoring Argentina's potential to displace Australia's market share in China and the rest of Asia, particularly given the competitive pricing of Argentine wheat and the possibility of lower protein levels in Australia's crop this season.