* Buyers may shift from U.S. wheat following GMO find in
Oregon
* But Australia wheat exports have been unsustainably high
* Growing demand from Aus livestock farmers also sapping
exports
* Canadian, European sellers could benefit
By Naveen Thukral and Colin Packham
SINGAPORE/SYDNEY, May 31 (Reuters) – Australia, the world’s
No. 2 supplier of wheat, could struggle to soak up extra demand
if international buyers increasingly shun the U.S. grain after
an unapproved genetically modified strain of the crop was found
in Oregon.
Major buyers Japan and South Korea have shelved plans to
purchase U.S. wheat, while other Asian nations say they are
monitoring the situation as U.S. officials race to quell alarm
following news of the discovery.
But tightening supply from Australia in the wake of
unsustainably brisk exports and growing demand from domestic
livestock farmers could drive buyers elsewhere, with Canadian
and European sellers set to profit.
“The bulk of grain suppliers (in Australia) are cancelling
shipping slots and selling grain to domestic feed mills and
feedlots,” said Stefan Meyer, a manager for cash markets at
brokerage INTL FCStone in Sydney.
Asian imports are a key influence on grain prices, with
wheat futures easing more than 10 percent so far this year
The region ships in more than 40 million tonnes of wheat
annually, almost a third of global trade of 140-150 million
tonnes. The bulk of that comes from the U.S., the world’s
biggest exporter, and Australia.
Traders said it would be impossible for Australia to sustain
the strong pace of exports seen earlier in the season, with the
country selling approximately 12.5 million tonnes of wheat in
the marketing year beginning October, roughly the same level as
last year despite production declining by a quarter.
“We are exporting at a substantial rate to a point where
prices will have to ration demand and that includes the export
market,” said Andrew Woodhouse, grains analyst at Advance
Trading Australasia.
Growing demand from the livestock industry in the world’s
third largest beef exporter is also eating up supply.
Australian cattle are largely grass-fed but livestock
producers have increasingly been forced to shift to grains this
year after an extremely hot autumn dried up pasture.
The supply of lower quality wheat is so tight that feedlots
are using top quality Australian prime and Australian hard
varieties of wheat to feed cattle. Typically, these are sold as
milling wheat to make bread and noodles.
As a result, old-crop wheat it selling at a premium of $50 a
tonne to new-crop in Queensland, compared with a discount of $10
to $15 a tonne in a year of ample supply.
NO RUSH
Japan is not rushing to find alternative sources of wheat,
however, with the county’s flour milling industry body saying
they have sufficient stocks for the short term.
“We haven’t thought about alternatives to the grade or
proposed candidates to the farm ministry (at this stage),” said
Masaaki Kadota, executive director of the Flour Millers
Association of Japan.
But Kadota added that it could be difficult for users to
find alternative soft white types of wheat to the U.S. Western
White Grade, as wheat grown in nations such as Australia and
Canada is mainly the medium to hard type.
