Grain millers in Bangladesh are boosting their wheat purchases from Russia and Ukraine as cargoes from key exporter India fade due to a supply squeeze in that country.
Bangladesh has booked about 800,000 tonne of wheat from the Black Sea region for shipment between mid-July and October, up from around 550,000-600,000 tonne in the same period last year, two trade sources said.
Strong demand from South Asia's top wheat importer and other key buyers could help buoy benchmark futures, which have been recovering from a 10-year low of $3.99-1/4 a bushel hit earlier this month due to pressure from plentiful global production.
"India is out of the market, Bangladesh buyers are taking larger volumes of feed wheat as well as milling grade wheat from Russia and Ukraine," said one Singapore-based trader.
"It is all about prices, most Bangladeshi millers take the cheapest origin."
Buyers paid $155-$168 a tonne, free on board, for Black Sea feed wheat with about 10.5-percent protein content, the sources said. They declined to be identified as they were not authorised to speak with media.
For milling wheat with 11.5- to 12.5-per cent protein, importers have paid $165-$180 a tonne FOB, they said.
India has been exporting wheat to Bangladesh for the last few years, but its recent crops have been hit by a severe drought linked to the El Nino weather pattern and by unseasonable rains.
Russia and Ukraine, two of the Black Sea region's leading wheat producers, have seen bin-busting grain production.
Ukraine's 2016 grain harvest is likely to be around 3 million tonnes bigger than the year before at around 63 million tonnes, agriculture ministry official Leonid Sukhomlin said earlier this week.
And Russia is facing a lack of grain storage as it remains on track to produce the largest cereal crop in post-Soviet history, said the head of Russia's Grain Union.
But analysts warned against relying too heavily on shipments from the Black Sea.
"Worldwide, many countries are depending on Russia to supply much of their wheat and that is risky," said one agricultural commodities analyst. "There could be delays."
Much of the Middle East and North Africa has heavily booked wheat shipments from the Black Sea region, taking advantage of lower prices.
Traders said there is already a delay of 10-12 days for ships waiting to load wheat at Russian ports.
Bangladesh has also booked about 200,000 tonnes of higher quality Canadian milling wheat, the sources said.