Global wheat importers are preparing for supply cuts, Reuters reports: attacks on grain infrastructure in the Black Sea are disrupting shipments, raising prices and increasing food security risks for major buyers.
According to the news agency, Chicago wheat benchmark futures prices have risen by more than 17% since early July, primarily due to a lack of supplies from the Black Sea region. Prices in the physical market have also significantly increased among competing exporters such as Argentina, Australia, and the USA.
In recent weeks, Russia and Ukraine have conducted mutual attacks on ports and ships. As a result, grain terminals have been closed, and shipping companies have been forced to delay or cancel dozens of shipments during the peak of the export season.
Reuters estimates that grain processing companies in Asia have signed contracts for the acquisition of about 2-2.5 million tons of wheat from the Black Sea region with delivery dates from July to September. This accounts for about 30-50% of import demand. However, concerns are growing that several shipments may not arrive on time.
A representative of the Indonesian millers' association has stated that current stocks are sufficient to meet the near-term demand for food wheat.
“However, we do not have large surplus stocks. If supplies from Russia and Ukraine do not materialize, we will have to seek shipments from other countries, such as Bulgaria, Australia, Romania, and Argentina,” he added.
Redirecting imports to other suppliers will be significantly more expensive.
According to Reuters, the cost and freight of Australian Premium White wheat is currently around $315-320 per ton, which is significantly higher than the price of the cheapest American wheat at about $305 per ton. Most shipments from the Black Sea region are offered at around $260-280 per ton.
