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Black Sea wheat exports to Asia hit record high in August, hurting Australian growers

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    • Russia, Ukraine shipped 2.762 mln T of wheat to Asia in Aug
    • Improved quality, record output, new capacity driving demand

    Wheat exports from the Black Sea region to Asia climbed to an all-time high last month as suppliers capitalized on record output, higher quality grain and new handling infrastructure, hurting traditional heavyweight supplier Australia.

    Amid a scramble by exporters to secure sales following four record global harvests, Black Sea traders have been able to boost volumes by undercutting rivals.

    Russia and Ukraine exported a record 2.762 million tonnes of wheat to Asia in August, according to Thomson Reuters flows data. Asia accounted for just over 40 percent of the 6.549 million tonnes of wheat shipped from the two countries that month, the data showed.

    Russia and Ukraine shipped 2.524 million tonnes of wheat to Asia last August and 2.079 a year earlier, pointing to a rising trend. August is typically the peak export month for the Black Sea following harvest in July.

    "Russia's wheat exports will be higher this year due to the record crop and the competition with Australia (in Asia) is easier this year," Andrey Sizov, the head of Russia's SovEcon agriculture consultancy told Reuters, noting a fall in freight costs.

    Wheat Wv1 has dropped almost a quarter in price since July 1.

    Black Sea sellers have provided stiff competition to the United States in North Africa and the Middle East over the past several years, winning market share.

    Now they are targeting Asia as the region's demand grows due to a rising population and changing eating patterns.

    Wheat consumption in Indonesia, the world's second largest importer after Egypt, has almost doubled in the last 10 years, and Japan and South Korea are other key importers.

    India made its biggest wheat purchases in a decade last year after production problems, while demand in China is rising for higher quality grades.

    IMPROVED QUALITY Test weight, which determines the volume of flour that can be extracted from grain, is the same for some Black Sea grades as for Australian wheat this year, said a procurement manager at one of Southeast Asia's leading millers.

    "We can say it is at par with Australian wheat and we are paying $40-$50 a tonne less for Black Sea wheat as compared with ... similar quality Australian wheat," the manager said.

    Russia will produce a record 81 million tonnes in the year to June 2018 and Ukraine is set for a third consecutive bumper crop, according to U.S. Department of Agriculture data.

    Both nations have been spending on infrastructure, building new ports, rail links and storage facilities.

    In Ukraine, total export capacity at sea ports is expected to jump to around 157 million tonnes by 2020 from the current 58.5 million tonnes, a senior transport official has said.

    He said 36 new port facilities were likely to be constructed in the next four years.

    Black Sea wheat shipments to Asia hit a record 2.76 mln tonnes  

    in August, stealing market share from Australia http://reut.rs/2f4Nr82


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