The squeeze on exportable wheat supplies available for Australia is prompting Interflour – which is part-owned by Western Australian farmers - to expand its wheat sourcing in Argentina, Russia and Ukraine.
Greg Harvey, chief executive of Singapore-based Interflour, which buys some 6m tonnes of wheat a year, said that the group's geographical position, coupled with a heritage of using Australian varieties, made Western Australia the default origin for its grain.
Interflour, which is 50% owned by Perth-based co-operative CBH, currently buys about two-thirds of its wheat from Australia, the southern hemisphere's top exporter of the grain.
However, the inability of Australian wheat growers, to raise their production in line with export demand was forcing Interflour to investigate raising its purchases from other countries, Mr Harvey said.
"Australian on-farm producing is rising by 1.5% per annum," Mr Harvey told the Agrimoney Investment Forum in London.
"But businesses such as ours are seeing a 7% increase in demand," he said, referring to the growth rates in consumption for South East Asia wheat millers.
"We are looking to develop [wheat] origination in the Black Sea and Argentina."
Australian wheat exports are expected in 2015-16 to drop for a fourth successive season, to 16.5m tonnes, after hitting a record 24.7m tonnes in 2011-12, according to US Department of Agriculture records.
The mismatch between growth in Australian wheat output, and the demand needs of the Asian countries on its doorstep, had been reflected in an expansion to some $40 a tonne in its premium over Russian and Ukrainian supplies.
"Wheat from Russia and Ukraine is of lower quality than Australian wheat, but not $40 a tonne lower," Mr Harvey said.
"We will see that trend [of premium expansion] develop."
He added that Interflour had been "very excited" by grain sector reforms Argentina, which has ditched wheat export taxes and quotas, flagging the country's history has a major exporter.
The quest for more diversified wheat sourcing comes as Interflour is amid expansion plans expected to lift its milling capacity to 6.4m tonnes as of the end of last year to 9.73m tonnes by 2018, which would place it among the top 10 world millers.
The increasing scale of the group, which has operations in countries such as Indonesia, Malaysia and Vietnam, has also raised the prospect of acquisitions in grain trading – to boost security of crop supplies at a time of consolidation among merchants.
One of the group's "biggest structural nightmares", as a buyer of such large quantities of wheat, would be "to have only three or four traders to buy from in the world", Mr Harvey said.
That had raised the appeal of acquiring assets in grain "accumulation", he said.
The trend of consolidation in grain trading has, for instance, seen China's Cofco acquire control of Noble Agri, and of Dutch-based Nidera.
By Mike Verdin