Insights April 2020
Insights April 2020
The report specifically addresses your questions around input supplies, underlying demand for food and fibre, and the impact on the supply chain across the commodity segments.
- Increased demand for staple food products including bread and pasta, have supported domestic demand for
- Export demand has been relatively immune to the impacts of coronavirus, owing largely to the small exportable
surplus after a difficult growing season for most.
- The smaller wheat crop year-on-year combined with strong wheat exports to date, mean the Australian wheat
balance sheet has very limited surplus, this combined with the weakening Australian dollar is providing insulation to
domestic wheat values against coronavirus impacts.
- Impact on Australian canola has been minimal. Exportable surplus is estimated to be around 1.3 million tonnes, and
with over one million tonnes exported to the end of March, majority of canola has already been sold and prices have
remained relatively stable.
- In 2019, China accounted for 12 per cent of Australian crop exports overall. The most significant category was
barley at 57 per cent, followed by canola at 13 per cent, and wheat at 3 per cent.
- Australia’s barley trade with China has been impacted by the ongoing anti-dumping allegations.
- Both wheat and barley trade with China have seen a significant spike in the first quarter of 2020.
- China has purchased large volumes of both wheat and barley as China’s local economy recovers from
Coronavirus. This demand has been further supported by the weakening Australian dollar.
- In the month of March, grain shipments to China accounted for 30% of total bulk grain shipments (1/3rd of both
bulk wheat and barley shipments for the month).
South Korea and Japan
- South Korea and Japan accounted for 11 per cent and 10 per cent respectively of Australia’s wheat exports in
- Both destinations primarily source specialty noodle wheat from Australia. This wheat is not easily substituted
with alternative origins; hence demand is considered inelastic.
- Given Australia’s reduced production in the 2019/20 season, the fact exports are booked months in advance,
and that wheat exports to date have already surpassed half of available exportable surplus, any impact will be
- Ports in both South Korea and Japan are reported to be operating at normal efficiency and sea imports are
- The Philippines was home to 18 per cent of Australia’s wheat in 2019, and for the year to date 2020 has been Australia’s biggest destination for wheat.
- The Philippines government have declared the movement of cargoes to and from the Philippines shall remain
unhampered, although delays may be expected as strict quarantine measures are being implemented.
- Whilst ports are operating as normal, staff availability and increased quarantine measures are causing some
- Any supply chain issues caused by Coronavirus has potential to slow wheat exports, however given reduced
production and high export demand, Australian wheat will find alternative destinations if required.
- Philippines demand is largely for Australian Standard White wheat, and bulk grain storage company stock on hand reports suggesting supplies are almost exhausted indicate demand from Philippines would decline in
coming weeks due to lack of suitable supply.
- Since 2017 Indonesia’s share of Australian wheat exports has fallen from 22 per cent to nine percent in 2019.
- Below average winter crop production, and high domestic pricing has seen Indonesia source increasing share of
its wheat requirements from cheaper origins, including the Black sea.
- Given the available supply of wheat from Australia, any impact of Coronavirus on Indonesia’s demand for wheat
is likely to have limited impact on Australian wheat values.
Sources: Australian Crop Forecasters and Profarmer Australia
*Bulk wheat exports declined month-on-month in February, but recovered in March
*Wheat prices have lifted $40-50 in March, supported by domestic demand and dwindling supplies.