A FAILED monsoon and the resultant shortage of wheat in India have seen the Australian wheat industry exporting grain to the subcontinental nation at a record rate.
Richard Perkins, head of marketing and advisory at Market Check, said Indian imports of Australian wheat could easily crack through the two million tonne mark.
Australian wheat exports have been running at a hot pace to India, with Australian Bureau of Statistics (ABS) data showing 711,251 tonnes of Australian wheat headed to India so far in the marketing year (October-October).
Mr Perkins said much of the activity, 478,662t, was moved from October to December, with the majority of this coming out of South Australia.
“Based on the exports we see with the ABS, together with what we expect from January through March, there will be a minimum of 1.5mt of wheat going to India this marketing year and that figure could easily crack the 2mt mark.”
From late in January onwards the pace of exports to India has slackened slightly, with much of the shipping stem now taken up with shipments to traditional south-east Asian markets.
However, Mr Perkins said recent US Department of Agriculture (USDA) had slashed a further three million tonnes from Indian production for this year’s wheat harvest which is beginning now.
Should a further deficit in production occur, he said further Australian exports could be executed later in the year.
“We could see a second flurry of purchases should the Indian government decide the country needs to import more wheat and maintain its current policies on import duties.
India removed its import duty on wheat in December and may continue with this policy if it feels wheat stocks remain low following harvest.
Mr Perkins said exports to India made up a whopping 14 per cent of total Australian wheat exports for October to December.
“This is huge to do this much business to a country which is often a net exporter of wheat,” he said.
“The newly created demand from India combined with the strong harvest means we are setting records in terms of the Australia wheat export program.”
Mr Perkins said based on a combination of publicly released data from port operators and assumed container exports based on past figures Market Check estimated a total around 7.3mt of wheat will be shipped from January to March 2017 from Australia, which would constitute a record.
For the marketing year overall, Mr Perkins said it was not inconceivable to suggest Australia could export 25mt, a figure that smashes previous total export figures out the water.
“There has been commentary around saying we could get to this figure and with prices where they are and Australia attracting the business internationally, the figure is not out the question.
“To achieve such a massive number you need three things, the grain to export, demand from buyers and supply chain capable of executing the consignments.
“We have the grain, logistically we should be able to get the grain out, even though it will stretch the freight network, and at current values the buyers are interested.
“It all adds up to 25mt of exports being a distinct possibility.”
To put the magnitude of the export program in context, Australia’s normal total wheat production is around 25mt, with domestic consumption normally around 7mt.