Asian feed wheat demand rises on Northern hemisphere harvest, improved weather

Feed wheat demand in Asia strengthened in the second half of June, driven by weaker global wheat prices amid harvest pressure from the Northern hemisphere and improving weather in Europe and Australia, according to market sources.

Chicago Board of Trade and MATIF milling wheat futures have been declining over the past two weeks, as the US and European winter wheat harvests gradually come online. US and European, particularly Black Sea, physical wheat prices have fallen substantially as a result, attracting the attention of feed buyers in Asia.

The Platts-assessed Ukraine Wheat 11.5% FOB Black Sea price fell 11% on the month to $214/mt June 27, according to S&P Global Commodity Insights data.

Meanwhile, slight improvements in the weather in Russia have raised hopes of a smaller-than-anticipated production cut in the major exporter due to prior frost damage, while higher rainfall in Australia is alleviating concerns of further yield penalties in winter crop regions, particularly in Western Australia.

“Rainfall has improved in Western Australia and they are poised for a strong comeback, as long as the weather conditions remain ideal through spring. New South Wales remains excellent. While Victoria and South Australia are patchy, Western Australia and New South Wales could potentially make up for any production shortfall in those states,” said a trade source based in Melbourne.

Some estimates by trade sources for Australia’s national wheat crop in the 2024-25 marketing year (October-September) have risen to 27 million-28 million mt compared with 25 million-26 million mt in early June. This is lower than the Australian Bureau of Agricultural and Resource Economics and Sciences’ latest estimate of 29.1 million mt in its quarterly report published June 4.

Trade estimates have largely remained conservative as the market awaits further weather developments throughout the growing season. “While weather has improved, a lot of things still need to go right for us to get an average crop, especially in Western Australia,” added a trade source based in Perth.

An Australian trade source estimated Western Australia’s wheat crop output at 9.5 million mt, followed by New South Wales at 9 million mt, South Australia at 3.5 million mt, Victoria at 4.0 million mt and Queensland at 1.5 million mt.

Platts assessed Australian Standard White wheat prices down 7.6% on the month at $267/mt June 27, showed Commodity Insights data.

Commodity Insights can confirm that eight cargoes, or approximately 450,000 mt of feed wheat, traded into multiple Southeast Asian destinations and South Korea over the current and previous week.

Table 1. Captured feed wheat trades into Asia in H2 June

Source: S&P Global Commodity Insights trade data

*shipment includes liner cost

Smaller volumes were also heard traded into Vietnam, though details on the trades could not be confirmed at the time of writing.

Black Sea feed wheat was the cheapest origin, though feed buyers from the Philippines continued to pay a premium of at least $20/mt CFR for Australian supplies primarily due to quality preferences, on top of a 7% tariff imposed on non-Australian feed wheat origins.

Meanwhile, another South Korean feed buyer, Feed Leaders’ Committee, was tendering June 28 for one cargo of optional-origin feed wheat for Oct. 30 or Nov. 30 delivery, with the results expected to be released later in the day. Black Sea or US feed wheat is expected to be the most competitive origin in the offer, trade sources said.

Milling wheat demand has also emerged for both bulk and container shipments, with strong interest emerging in Vietnam, Thailand and Indonesia, though several sources noted that bid levels were often $5-$10/mt below offer levels.