Wet spring, global outlook point to good returns for wheat

Forecasts for wheat output are now more than 30 million tonnes and new crop prices will be influenced by some of the most distant markets, which are experiencing a lack of rainfall.

Harvest boost: Growers welcome the timely rain which has coincided with strong demand for wheat. Picture: Dannika Bonser

GRAIN growers are active sellers as timely rainfall in eastern Australia has coincided with wheat prices hitting four-month highs.

Rain this week in Victoria and the southern half of NSW has been welcomed by growers, as the falls follow some hot windy days for their mature crops.

Forecasts for Australian wheat production are now at more than 30 million tonnes and new-crop prices will be influenced by the some of the most distant markets.

Already, the shipping programs of the major ports are booked up. Shipping from the port of Geelong is booked out from December through to mid-May and Portland is at full capacity from January to mid-June.

The large crop, combined with the lack of substantial demand from China means that the barley from eastern Australia will need to be aggressively priced into new markets.

Increasing volumes of Australian barley are expected to be shipped to Saudi Arabia.

While this is the world’s largest importer of barley, Saudi Arabia is also much closer to the high-volume barley exporters of the EU and the Black Sea region.

Sales in these tenders are made with the seller retaining the option of sourcing the grain from many countries, ­including Australia.

One factor that is changing the price outlook for grain is the lack of rainfall in the eastern regions of the Black Sea region and the hard-red winter growing regions of the US.

Rainfall in the mid-west of the US during August and September has been well under half the average and key wheat production regions of Russia are similarly dry.

Accordingly, the planting window for wheat is being compressed into a tight time- frame, which typically ends in mid-November when winter sets in.

According to traders, grower selling around the Black Sea and EU has slowed and cash prices have remained resilient to temporary falls in futures prices.

Some rain is forecast for Russia and Kazakhstan, but some lower than estimated wheat and corn stocks in the US have also supported prices.

This week, Chicago corn futures are $8 a tonne higher and wheat futures are up $5.40 in Paris and $14.90 in Chicago.

Tight supplies of old-crop stocks in some areas are creating a volatile market for current crop grains.

Prices displayed in the tables are for new-crop delivery, but old-crop wheat prices in the Melbourne market are $10 a tonne higher this week.

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