Asian importers will step up purchases of wheat from Ukraine and Russia as bumper harvests there push down prices, shrugging off concerns the region’s geopolitical crisis could disrupt shipments.

Flour millers in Indonesia, Asia’s biggest wheat importer, have already bought around 125,000 tonnes of Russian wheat in recent deals, while two Singapore-based grains traders said buyers in Malaysia, Vietnam and South Korea were also negotiating contracts.

Blessed with near-record output, exporters in Russia and Ukraine are offering the cheapest wheat from the Black Sea region, tempting Asian buyers to switch from the Australian and U.S. grain that has traditionally dominated their supplies.

“We don’t think there will be any problem in getting grain cargoes from Ukraine and Russia,” said a Bangkok-based grains trader who sells Black Sea wheat and corn in Asia.

“Whatever volumes are there will get shipped out,” he said, declining to be named as he was not authorised to speak with media.

Russian wheat with 12-percent protein content was sold to Indonesia at $290-$295 a tonne, including cost and freight (C&F).

That compares with $310-$320 a tonne quoted for similar quality U.S. and Australian grain. Indian wheat is being priced at $305 a tonne.

Chicago wheat extended its losing streak on Monday to its lowest since early March as improved weather in the U.S. grain belt boosted the outlook for supply.

Buyers and analysts said conflict in Ukraine was unlikely to affect wheat supplies in the short term, with some saying the political uncertainty could actually ensure prompt delivery.

“The key is that suppliers who have grain in Ukraine and Russia would want to get it out as quickly as possible,” said Ole Houe, an analyst at Sydney-based brokerage IKON Commodities.

“The idea is to get your cash as you never know what will happen. Supply is going to be rapid, even if it gets too cheap.”

NATO defence ministers will discuss temporarily reinforcing forces in Poland when they meet in Brussels this week, a spokesman for the German defence ministry said on Sunday, a move that would be aimed at reassuring countries nervous about Russia’s intervention in Ukraine.


Asian wheat buyers typically ship in close to a million tonnes of wheat from the Black Sea, but this year imports could be much higher, market participants said.

“Look at the tender business being done all over the world. It is all Black Sea,” said Houe. “Exports to Asia will easily cross to more than a million tonnes.”

Russia is expected to export 25 million tonnes of grains during the 2014/15 marketing year, Interfax news agency cited Agriculture Minister Nikolai Fyodorov as saying last week.

The U.S. Department of Agriculture has forecast Russia to export 19 million tonnes of wheat in the year to June, compared with 18.2 million tonnes a year ago.

“Russia’s grain crop is looking good,” said Carsten Fritsch, a commodity analyst at Commerzbank AG in Frankfurt. “Given strong crops in Europe, there will be more competition in MENA (the Middle East and North Africa), so rising volumes from the Black Sea will probably go to Asia.”

Ukraine’s 2014 grain harvest may exceed last year’s record output of 63 million tonnes thanks to favourable weather this winter and spring, weather forecasters have said.

Higher exports from Russia and Ukraine will pose stiff competition to grain from Australia and the United States.

For Australia, the world’s fourth-largest wheat exporter, the challenge could extend into its new crop, which will be ready for harvest in November.

Australian new-crop wheat is being priced at least $60-$70 higher than Black Sea supplies.

“If the difference is $20 to $30, one can understand that buyers will be willing to pay a premium for Australian wheat,” said a Melbourne-based commodities analyst, who asked to remain anonymous as he was not allowed to speak to media.

“We have $70 a tonne, which is way too much. We are bearish on new-crop Australian wheat.”