Offer indications for Australian Premium White wheat rose $1-$2/mt day on day to $225-$226/mt FOB South Australia, boosted by a firmer Australian dollar as well as concerns over crop damage from frost, traders said Wednesday.
Low supply in the Australian domestic market also led some traders to move up offers as farmers remain reluctant sellers in view of relatively low prices, and most traders could not discount aggressively without stocks at hand or receiving firm bids.
APW wheat prices have fallen to a near two-month low of $225.50/mt FOB Australia on August 29 from a record high at $263/mt on July 12, S&P Global Platts data showed, with prices softening after crop prospects were expected to improve by rain in August.
Further more, ample global supply of lower protein grade wheat, as reported by the US Department of Agriculture in its monthly supply and demand estimates report released August 10, weighed down market sentiment.
An appreciation of the Australian dollar against the US dollar over the week has led sellers to raise their US dollar-denominated offers. The Australian dollar stood at $0.80 Wednesday, up from $0.79 in the previous week.
Further buoying sell sentiment was potential crop-damaging weather forecast affecting northern and eastern Australia, with temperatures as low as minus 4 degrees Celsius, according to a frost warning released by Australia's Bureau of Meteorology on August 29.
Typically, cereal crop will sustain higher frost damage after germinating, according to traders, although some traders felt it was too early a stage for wheat to be affected by frost.
A trader said crop plantings in New South Wales state in the east of Australia are so varied that frost would not affect the entire crop equally. But since planting in South Australia and Victoria states are more uniform, the impact will likely be bigger if frost sets in at the stage where significant damage can be done.
Still, a number of traders felt that crop development in South Australia and Victoria has not reached an advanced growth stage to sustain enough frost damage.
Meanwhile, export trade activities remain thin for Australian wheat, with Southeast Asian buyers staying on the sidelines.
Their buying indications have not moved, as prices of wheat from other origins including US soft and semi-hard wheat, as well as Black Sea milling wheat, softened last week.
Some traders felt the recent increase in offer price levels from South Australia and Victoria -- two of the most competitive wheat producing regions -- over the past two months was riding on news affecting eastern Australia and not based on market fundamentals.
"There's not a great deal of wheat grown in those areas, northeast or Gippsland, it's more dairy up there" added an Australian trader.
