Grain prices lift on rising demand while Russian forecast drops
Markets respond quickly as the world’s cheapest wheat supplier lowers its outlook.
LAST week’s rain was better than forecast, crops are growing well and grain prices are higher this week.
Improving demand is impressing growers by pushing up mid-winter prices.
The early stage of the Russian harvest has exposed some disappointing yields, catching traders by surprise.
Analysts considered the Russian wheat crop to sit in the 78 to 80 million tonne range, but there are concerns it could fall as low as 75 million.
With Russia a key supplier of the cheapest wheat in the world, markets tend to respond quickly to this type of news.
Many fund traders in the US wheat futures are short, often a defendable position in the middle of US harvest. Traders hit the markets to cover some of their short position.
Further reports of lower yields in the EU, higher Chinese demand and lower Argentinian supplies all added fuel to the fire in the Chicago market.
The December contract of the Chicago exchange is up an impressive $20 a tonne. Paris wheat futures are a more subdued $4.75 a tonne higher.
Of this $20 rise, new-crop wheat prices in the Melbourne/Geelong port zone were up $6 a tonne and $8 in the Port Kembla zone while Port Adelaide values surged $18.
Given the favourable season, there has been a steady stream of new-crop wheat selling from growers in both Victoria and NSW.
South Australia is also experiencing price surges for old-crop wheat.
Australian Standard White wheat delivered to Port Adelaide is quoted $314 a tonne up $14, while the Geelong price is $325 a tonne, up $9.
Two consignments of wheat totalling 65,000 tonnes are to be shipped from Geelong this month.
By the time harvest comes around, it is likely there will be some traders who will be prepared to post premiums for malting barley. In the meantime, new-crop barley prices are restricted to BAR1 grade.
Since the barley import tariffs were announced by the Chinese, the export activity into other markets has increased. Multiple traders are bidding $260 a tonne for old crop BAR1 grade barley delivered to Geelong.
Even though US corn futures fell $4.94 a tonne last week; new-crop barley prices have been supported by the higher wheat prices and are $4 a tonne higher this week, at $231 delivered to Victorian ports.
New-crop canola prices remain firm at $587 a tonne delivered to Victorian ports, but nugget lentils have slipped $25 a tonne to $670 delivered to Melbourne container packers in December.
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