Australian Wheat Holds Firm as Black Sea Supply Disrupted

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Buyers refrained from purchasing Black Sea supplies last year due to concerns over financing, execution risk, and inspection delays.

The competition between Black Sea wheat and Australian crops for Asian demand during the start of their marketing seasons every July has been a traditional practice. With the ongoing Russia-Ukraine war, there has been a disruption in the supply of wheat from the Black Sea region to Asia.

COVID-19, and Climate Change Impact Food Security

During a ministerial-level open debate on conflict and food security, over 75 speakers conveyed that the COVID-19 pandemic, climate change, and the war in Ukraine have significantly impacted the global food crisis.

The absence of grain exports has resulted in the escalation of this crisis to famine levels across the world. As the one-year mark approaches since the start of the war, whether wheat exports will recover remains to be seen.

António Guterres, Secretary‑General of the United Nations, said, “When this Council debates conflict, you debate hunger. When you fail to reach consensus, hungry people pay a high price.”

In mid-February, a potential resurgence of Black Sea wheat exports to Asia surfaced after a trade deal was concluded with Thailand at a lower price of $7-$8/mt compared to Australian feed wheat shipment in July.

Financing and demand challenges for Black Sea wheat

However, a limitation exists in the revival of Black Sea wheat exports to Asia. S&P Global analysts predict that the wheat harvests in the Black Sea region for 2023-24 will be smaller than pre-war export volumes, which will impede the prospects of achieving previous export levels.

Victoria Sinitsyna, the S&P Global senior grains analyst, said, “In Romania, the farmers are struggling to maintain the quantity and quality of inputs over drought and high energy prices.”

The fundamental issues related to financing also remain a significant challenge, limiting the demand for Russian and Ukrainian wheat by some Southeast Asian buyers.

According to market analysts, however, the demand for Australian feed wheat in Asian markets is likely to remain strong, despite the competitive pricing of Black Sea wheat.

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