* Supply of Australian wheat to make noodles tightens
* Farmers hold back stocks with prices at decade lows
* Wheat mills may seek U.S. cargoes if delays prolonged
(Adds pictures advisory to slug, removes graphics advisory)
By Naveen Thukral
SINGAPORE, April 28 Asian flour millers are
facing tight supplies of a variety of Australian wheat which is
used for making mainly noodles as farmers hold back stocks amid
near decade-low prices.
Buyers are having difficulty in getting shipments of
Australian Standard White (ASW) wheat for the coming months,
which could force millers to seek alternative supplies, traders
and millers said.
Asia is the world's biggest and fastest growing wheat
market, fuelled by rising consumption of noodles, flat breads
and bakery products. China and India each consume roughly 100
million tonnes a year and Indonesia has emerged as the world's
second largest wheat importer behind Egypt, buying more than 10
million tonnes in the year to June 2016, up 35 percent on a year
"Farmers are not willing to sell as they feel prices are
really low," said one Singapore-based trader. "There is no
shortage of ASW, there was bumper production."
ASW wheat was being sold at a 10-year low level of about
$190 a tonne, free on board, in January and February. The market
has since recovered to trade around $200 a tonne but prices are
still below the $220-$240 a tonne average of recent years,
The world is awash with wheat, with the U.S. Department of
Agriculture forecasting global inventories at a record 252.26
million tonnes at the end of the crop year in June.
Australia produced a record 35.13 million tonnes of wheat in
the 2016/17 season - about 18 percent more than the previous
record of 29.6 million tonnes set in 2011/12.
"I think it is just a temporary problem of farmers not
selling," said a procurement manager at one Southeast Asia-based
flour miller. "There is additional demand as well, India has
been buying Australian wheat."
India has bought close to 5 million tonnes of wheat since
June, the most in a decade, to meet a supply shortfall after two
years of lower production.
Even for Australian farmers who want to sell, big volumes of
wheat and other grains being sent by truck and rail across the
country after a bumper season are creating backlogs.
"There is an issue of getting grains to the ports from
farms," said Ole Houe, analyst with brokerage IKON Commodities
in Sydney. "There's not much problem at the ports themselves."
Asian mills prefer using ASW for noodles, where texture and
mouth-feel can be affected by factors like protein content.
Wheat importers also have the option to blend grains from
other origins, traders said.
"They can replace ASW with other origins and also blend
varieties of wheat from the Black Sea region," said Singapore
trader. "But most millers will wait even if there is some
temporary delay. They prefer Australian wheat."
(Reporting by Naveen Thukral; Editing by Richard Pullin)