THE 2020/21 Australian wheat crop is estimated at 27.9 million metric tonne, up 84 per cent on last season.
Australia's wheat exports are pegged at 17mmt for the 2020/21 marketing year, due to larger exportable surplus created by the favourable growing conditions across most of Australia this season.
Western Australian wheat production for 2020/21 is about 8mmt, with APW and AH accounting for more than 60pc of grade splits.
We may start to see the premiums for higher protein wheats widen as forecast rainfall, particularly in eastern Australia, could see large portions of the crop downgraded.
Australian national wheat exports for the 2019/20 season are estimated at 9.1mmt, with South East Asian destinations accounting for a third of exports.
The east coast drought in recent years has reduced the volume of grain available for export as traditional export-orientated States (WA and South Australia) moved wheat interstate rather than to export markets.
There are concerns that a lack of international exports in the past two years have hurt Australia's market share, particularly in the Asian region.
However reduced European Union production was diverting Russian wheat, which has filled South East Asian demand in recent years, to Northern African destinations providing optimism that Australia can claw back some market share in the coming season.
When looking at which countries Australian wheat competes with, Argentina is a main contender.
Argentinian wheat production has been about 19mmt for the past four years, with exports of 13mmt per year.
Argentina competes directly with Australian wheat exports and has increased its market share in the Asian region in the past two years, not only for wheat but other feed grains such as corn.
The most recent update from the United States Department of Agriculture's Buenos Aires office has cut Argentina's 2020/21 wheat production down to 17.4mmt.
This has corresponded to wheat exports being revised lower to 11.2mmt, down 15pc year-on-year.
The cut to export volumes can be attributed to lower production due to the dry weather (the La Nina phenomenon that brings wetter-than-usual conditions to Australia, has the opposite effect in Argentina with drier-than-usual conditions) but also because of increased competition from Australia.
Australian wheat is some of the cheapest in the world which means it is well placed to capitalise on strong international demand.
Kwinana APW FOB values are about US$266/t, pricing more competitively into the Asian region than Black Sea or Argentinian origin wheat.
Russian milling wheat recently filled a 165,000t Egypt tender at an average price of $US278.5/t CFR (cost and freight).
This tender was about US$22/t higher than Egypt's previous tender a month ago.
World wheat export prices continue to strengthen being underpinned by production concerns due to dry weather and elevated Russian wheat prices.
Wheat production cuts in Argentina, dry conditions across winter wheat plantings in the US and Russia are supporting prices.
Futures markets and global wheat prices are fundamentally supported by these weather concerns and if significant rainfall is received across winter cropping areas in Russia and the US, then we may see some downside to local pricing levels.
Australian wheat is currently some of the cheapest in the world which means we are well placed to capitalise on strong international demand.
