By Colin Packham and Michael Hogan
SYDNEY, Aug 5 (Reuters) - CBH Group, Australia's largest wheat exporter, is moving into Russia, allowing the grower-owned cooperative to tap the competitiveness of Black Sea grain in Asian markets.
Operating under the name Granary, CBH Group will buy grain from Russian growers to sell and ship to international customers, using existing supply chains around the Black Sea area, it said in a letter to its members seen by Reuters.
The expansion into Russia will allow CBH Group to compete with some of the world's largest exporters, including Cargill CARG.UL , Archer Daniels Midland Co ADM.N and Bunge BG.N , which all have Russian operations to capitalise on the growing demand for Russian supplies in Asia.
"This new venture will supplement grain purchased from Australian growers by allowing CBH to better satisfy customer requirements through providing varieties of grain that are prevalent in the Black Sea region but currently not grown in Australia," CBH said in the letter.
Black Sea wheat is increasingly attractive to Asian customers - a market that Australian exporters have historically dominated - as well as to buyers in the Middle East and Africa.
While Australia will probably remain the largest supplier of wheat to key markets such as Indonesia in the current 2015/16 season, sellers from Russia and Ukraine are capturing larger market shares. ID:nL3N1032WJ
Black Sea exporters are taking advantage of a bumper crop and lower inland transport costs to undercut prices offered by Australian sellers.
Black Sea wheat is being sold as low as $210 a tonne, traders said, more than A$30 ($22) cheaper than Australian supplies, eroding any shipping freight advantage enjoyed by the world's fourth-largest exporter.
Australia's new-crop wheat, which will be available in December, is more expensive than its rivals' as worries over dry weather mean farmers are reluctant to sell forward before production is nearer harvesting.
Those higher prices are compounded by a slump in freight rates - Australia in the past had an advantage in low shipping costs from its ports - which has tilted the scales towards its Black Sea rivals.
A 2014 report by Rabobank pegged wheat production in Australia as the world's most expensive at nearly $150 a tonne due to greater input and labour costs and high domestic transport costs.
($1 = 1.3598 Australian dollars) (Editing by Alan Raybould)