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Australia should compete with Ukrainian wheat on quality, not price: GrainCorp

https://www.chemnet.com   Jul 29,2015 Platts
Australian wheat will find it difficult to compete with Ukrainian supply on price when it comes to generic wheat grades, and should focus on being a reliable supplier of consistent product, Mark Palmquist, CEO of exporter GrainCorp at the Australian Grains Industry Conference in Melbourne Tuesday.

Black Sea wheat exports have made ever deeper forays into Asian markets recently, including Indonesia and China.

"Ukraine needs the currency, and they will continue to export competitively. It will be difficult to compete on price on a generic quality," Palmquist said.

Australia's high-quality prime hard and hard wheats, which have upwards of 13% and 11.5% protein, respectively, are popular products across Asia, where they are used to produce, for example, certain types of Chinese and Japanese noodles.

"We have to play a different game" and be a reliable supplier of consistent and high-quality products, he said.

"But this alone will not stem Black Sea flows into Asia, which are needed to fill the deficit of supply from Australia in coming years," Greg Harvey, managing director and chief executive of Asian flour mill Interflour countered.

"[Black Sea supply], which we started buying in 2005], is a steady part of our program," Harvey said, though his company still procures about three quarters of its wheat from Australia.

Commenting on the two supply basins, he said that Australia "needs to work on supply chain costs," a theme echoed during the conference by the CEOs of both GrainCorp and the country's largest wheat exporter CBH.

On the Black Sea wheat export market, Harvey noted the recent emergence of "very well-financed" Ukrainian and Russian companies posing an increasing threat to the market share of international trading firms.

GrainCorp -- one of Australia's top five wheat exporters -- exports around 6 million mt of grain products to over 30 countries, and is also a flour producer, milling 35% of Australia output, according to the company's website.

Interflour is one of the largest flour millers in Asia, with a total milling capacity of close to 1.5 million mt/year, with seven mills operating in Indonesia, Vietnam, Malaysia and Turkey.

The company is 50% owned by CBH.
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