Australia's high-protein wheat production rises on dry weather


"Suppliers in NSW (New South Wales) and Queensland are preserving higher quality grades for exports," said a Melbourne-based trader. Krisztian Bocsi

The Asia-Pacific is this year likely to import less of the high-protein wheat used to churn out food such as noodles and pizza as growers in the region ramp up output, traders said.

Australia, the world's No.4 wheat exporter, has harvested larger volumes of protein-rich hard wheat in the 2017/18 crop year, while the amount of land dedicated to growing wheat in China is expected to be the biggest in five years, with traders saying high-quality grain will make up an increasing chunk of that.

Tempered Asian appetite for imports of high-protein wheat could hit supply from key growers of such crops including the United States and Canada.

Asia is the world's top consumer, producer and importer of wheat, with annual purchases accounting for almost a third of global trade.

"Australia is in better shape this year to meet hard wheat demand for customers in Southeast Asia," said a Singapore-based trader, referring to increased production of protein-rich Australian Prime Hard (APH) wheat.

A hot and dry 2017 growing season caused Australia's wheat crop to shrivel by nearly 30 percent from the season before, its largest contraction in a decade.

But what the heat took away in quantity was made up for in part by a rise in quality as the hot conditions boosted grain protein levels.

"Suppliers in NSW (New South Wales) and Queensland are preserving higher quality grades for exports," said a Melbourne-based trader.

All traders declined to be identified as they were not authorised to speak with media.

China's wheat area this year is expected to be the largest since 2012/13 at 24.2 million hectares, the US Department of Agriculture estimates, with farmers planting more high-protein varieties.

One grains trader in China said the area under protein-rich wheat has doubled this year compared with 2016/17, but did not say how many hectares were planted with such crops.

"The main reason is good quality wheat sells well. Flour mills are transforming, switching to special flour as diets change," he told Reuters.

"China will not export high-protein wheat, but higher (domestic) output will take care of some of its own demand which is (typically) met through imports," the Singapore trader said.

China is the world's top consumer, producer and importer of wheat. It grows several types of high-protein wheat, including Shiluan 02-1 which is deemed similar to US hard red spring wheat, known worldwide for its quality.

Tighter supplies last year of high-protein wheat lifted Minneapolis Grain Exchange prices to a three-year peak in July.

The market has since eased after US and Canadian spring crops made it through scorching growing seasons in better condition than expected, but top quality supplies remain tight in key exporting nations.

Still, even with reduced demand from China there will be Asian imports of high-protein US and Canadian spring wheat, according to trade sources.

"Some mills use Canadian or US wheat for some special types of flour, which they will continue to buy," said one trader.

China's overall wheat imports are forecast to be about 4 million tonnes in 2017/18, compared with 4.41 million tonnes a year ago, according to the USDA.

Australia's main wheat crop is harvested in November-December, while China has two crops - the winter wheat crop, which is gathered in May-June, and the spring crop that is harvested in August-September.


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