Australian wheat demand stands to rise in Southeast Asia amid Middle East conflict

The escalation in the Middle East conflict since late February has led to an uptick in dry bulk freight rates, with Panamax freight from Australia to Southeast Asia up about $2-$4/mt week over week, while steeper increases were seen for routes from the US Pacific Northwest and East Coast South America ports, several Australian and Singapore-based trade sources said.

“Crude oil and bunker prices are up, but it’s also getting difficult to charter vessels from ship owners, especially for longer voyages to Asia,” a Singapore-based grains trader said.

Freight costs from ECSA ports were $7-$10/mt higher week over week, a second Singapore-based grains trader said.

As uncertainties mount over the duration of the conflict and its impact on freight costs, the situation may soon boost regional appetite for Australian wheat, according to four Australian wheat trade sources and two Asian grains traders.

“I think Australia’s relative competitiveness is better and buyers [will be] willing to pay up a little more with [the Middle East] conflict,” a Victoria-based trade source said.

Bids from Southeast Asia had also strengthened slightly week over week, the same Victoria-based source and a Perth-based exporter said.

Nonetheless, flat price offers for Australian wheat still remain elevated, according to several Southeast Asian millers.

“I think buyers are not ready to confirm these higher CFR prices yet and will just wait-and-see how the Middle East situation develops,” a Vietnamese flour miller said.

Additionally, the strength of the Australian dollar will continue to play a major role in influencing the prices of Australian wheat and upcoming weather developments ahead of winter crop sowing will also dictate grower selling pace in the region, several Australian wheat trade sources said.

Platts, part of S&P Global Energy, last assessed Australian Premium White and Australian Standard White at $260/mt and $253/mt FOB Kwinana, respectively, both up $2/mt day over day March 4.