Some Asian flour mills are looking to lock in wheat supplies until well into the middle of 2019, potentially shaking off a years-long trend for hand-to-mouth buying as global output is set to drop for the first time in six years.
World wheat supplies are forecast to tighten in the second quarter of 2019 as shipments from top exporter Russia slow following rapid sales earlier in the season, while cargoes from No.5 supplier Australia are expected to dwindle after scorching weather hit crops there.
That would leave the United States and Canada as key wheat exporters in the April-June period, likely pushing up benchmark prices for the grain.
“Mills want to make some forward purchases as U.S. and Canadian wheat next year will come at a price,” said a Singapore-based trader at an international grain trading company.
“We are expecting a supply squeeze to come after March.”
Wheat millers from Indonesia, the world’s second-largest importer, and Thailand have been in the market this week looking for shipments arriving in April and beyond, said the source and another trader in Singapore.
“We have had enquires and expect some deals to be signed in the coming weeks,” said the second trader.
Both traders declined to be identified as they were not authorized to speak with media.