SINGAPORE – Asian grain buyers are ready to re-enter the market after a pause of about two months caused by the coronavirus lockdowns, seeking wheat from Black Sea suppliers, two trade sources said.
Millers across the region, including the no. 2 global importer Indonesia, are looking for new-crop Black Sea wheat for July-August shipment.
“Millers haven’t signed any contracts yet as they are just enquiring about prices,” said one of the traders, who is based in Singapore and sells Black Sea and US wheat. “We expect them to start booking cargoes in the first week of June.”
Analysts and traders expect lockdowns and a severe tourism collapse to drag down global wheat consumption in the year to June 2020.
“Buyers did not have a clear idea on how much demand destruction has taken place,” the second trader said. “Now they are in better shape, looking at first-quarter consumption data.”
While wheat demand from Indonesian millers has dropped by around 3 percent between the January-April period, tourism-dependent Thailand is one of the worst-hit regions, with a decline in consumption of about 15 percent, the traders estimated.
A global grains surplus is expected for the 2020/21 season, the International Grains Council said on Thursday, raising its production forecast and cutting consumption outlook.
The IGC, in a monthly report, raised its grains production forecast by 12 million tons to 2.230 billion tons, while trimming consumption by 4 million tons to 2.218 billion tons.
Black Sea wheat for July shipment was quoted around $220-$225 a ton, including cost and freight to Southeast Asia, around $5 a ton higher than prices at the beginning of May.
Chicago wheat futures are set for a second week of gains, with adverse weather in parts of the Black Sea region and the US underpinning prices, even though world supplies remain ample.
