The Australian grain industry will find new long term export opportunities in Asia to replace its traditional markets in the Middle East and North Africa.
This is the finding of a report by Rabobank.
According to the report, Australia’s proximity to Asia and subsequent cheap freight costs give us a competitive advantage in this market, particularly in years of high global wheat production when there is additional export competition.
But as the report author Rabobank senior grains and oilseeds analyst Graydon Chong said, Australia’s ability to take advantage of these opportunities will rely on us sending the “right market signals” through the supply chain from bulk handlers and grain marketers.
“At the farm gate level, the ability of Australian farmers to adapt to changes in market demands amidst a deregulation of the wheat export market has been challenging but productive,” Chong said.
“The responsiveness of growers to market signals regarding the quality, variety and types of crops demanded will be an integral part of the success of exports into the shifting global markets.”
These new opportunities in Asia will come as opportunities in the traditional markets of the Middle East and North Africa contract.
Chong puts this down to the emergence of the Black Sea region as a wheat producer. Producers from there have been able to increase the quality of their product while keeping costs low.
In addition, Black sea wheat producers have the advantage of their close proximity to The Middle East and Africa.
“For Australia, the increase in competition in the global wheat export market will cause further shifts in trade dynamics, and will likely result in an increase in Australia’s focus on trade throughout Asia,” Chong said.