Australia set to grow market share in Asian feed markets
Southeast Asian feedmillers are increasingly switching out of imported feed wheat and replacing a fraction of that demand with Australian feed barley as they continue to battle record high wheat prices amid weaker downstream demand.
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Register NowPhilippines' San Miguel Corporation, or SMC, was seeking feed wheat or feed barley via tender Aug. 11 for October-November shipment. After having tested small portions of feed barley since the start of the year, it appears that SMC is seeking to incorporate more feed barley into their feed mix, sources said.
The trend is consistent with other feed buyers in the country, with Pilmico having booked a combo vessel of Australian feed wheat and feed barley on Aug. 6 at around $320/mt CFR and $270s/mt CFR, respectively, for H1 November shipment.
The Philippines imported 109,659 mt of Australian feed barley between October 2020 and June 2021, up from merely 5,500 mt during the same period in marketing year 2019-20 (October-September) and 11,500 mt during the full MY 2019-20, customs data showed.
Similarly, Vietnam has sharply increased its intake of Australian feed barley, standing as the fourth-biggest importer, as feed buyers in the country continue to shun expensive imported feed wheat and corn.
Vietnam took close to half a million mt of Australian feed barley, or 422,000 mt, this season up until June 2021, compared with only about 20,000 mt over the same time last season and 34,300 mt for full MY 2019-20.
Thailand's Feed Millers Association also issued a tender Aug. 11 seeking feed wheat for October-December shipment but for lower volume than usual. The consortium generally purchases full Supramax or Panamax vessels but this time it issued tender for 40,000 mt for October, 51,000 mt for November and 46,500 mt December.
"Weird quantity...demand is weak as they only bought 1 boat for August-September," said a trader in Singapore. The buying consortium usually purchases two to three cargoes of feed wheat each month, S&P Global Platts trade data showed.
While feed wheat demand takes a hit, Thailand has increased Australian feed barley purchases as it took the spot of the second biggest destination for Australian feed barley just behind Saudi Arabia.
Between October 2020-June 2021, Thailand has taken just over 1 million mt of Australian feed barley, up 145% from the same period last season and up 87% from the entire MY 2019-20.
Australian market share
Australia is well placed to capture a chunk of feed demand in Asia and expand its market share going into the new marketing year starting October 2021, though new crop shipments are more likely to commence from December 2021.
Wheat and barley production in Australia is forecast to reach 27.8 million mt and 10.4 million mt, respectively, for MY 2021-22, Australian Bureau of Agricultural and Resource Economics and Sciences, or ABARES, said in its latest June crop report. However, traders expect the wheat production at 32 million mt and as high as 35 million mt, following widespread rains since the start of the planting window.
Australia's proximity to Southeast Asia gives the origin freight advantage. Tax advantage in certain destinations like the Philippines will boost price competitiveness as some of the major grain producers continue to face weather woes. This will keep grains prices at inflated levels amid a persistently tight corn balance sheet.
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August 11, 2021 at 06:00PM
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Southeast Asian feedmillers switch to feed barley amid high feed wheat prices - S&P Global
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