Price gap between Australian wheat grades hits three-year high amid shortage of high-protein grain

The price spread between Australian Premium White (APW) and Australian Standard White (ASW1) wheat widened to $24/t on October 13, reaching its highest level since July 2023. According to S&P Global Platts, the widening premium reflects limited supplies of higher-protein wheat, while lower-quality grain faces competitive pressure from cheaper corn and alternative suppliers. Disruptions to grain exports from the Black Sea region are adding further uncertainty to the market.

Restrictions on Black Sea shipments are forcing importers in Southeast Asia and Bangladesh to reconsider their traditional sources of milling wheat. According to market participants, grain exports from the Black Sea have virtually ground to a halt, increasing demand for alternative origins. However, replacing high-protein wheat is more difficult than sourcing lower-grade grain. Australian traders note that high-protein wheat supplies remain limited, while standard grades are being offered more aggressively.

The expected composition of Australia’s wheat harvest is another contributing factor. According to market participants, lower-protein wheat, particularly the ASW1 grade, is expected to dominate production this season, as it did last year. Meanwhile, supplies of APW and Australian Hard wheat remain relatively limited. This supports premiums for wheat with higher quality specifications, while standard-grade wheat prices face stronger competitive pressure.

The situation is different in the feed grain segment. Falling corn prices and competitive wheat offers from South America are putting additional pressure on feed wheat prices in Asia. According to Platts, feed corn prices on a CFR Northeast Asia basis stood at $281/t on October 13, down $15/t month-on-month. Meanwhile, South American feed wheat cargoes were traded at approximately $295/t CFR Vietnam in early October. With ample corn supplies available, feed mills are increasingly considering corn as a substitute for feed wheat.

According to market participants, Asian importers have already largely covered their feed grain requirements through January, limiting demand for additional shipments of lower-grade wheat. Meanwhile, higher-protein milling wheat remains more difficult to replace with other crops. As a result, the global wheat market is showing an increasingly pronounced divergence in price movements across quality grades: tight high-protein wheat supplies are supporting premiums, while the feed grain segment faces pressure from abundant supplies and competition from corn.

Tags: Australia, prices, wheat