Local and global grain prices weaken

Ample world wheat supplies are expected to keep global grain prices low.

Pressure on: ABARES has indictaed “abundant” world wheat supplies were anticipated to keep global prices low.

GRAIN prices are continuing to come under pressure as world production estimates increase and the Australian dollar strengthens.

The Australian dollar lifted above US70 cents earlier last week, reducing Australian grain’s export market competitiveness, according to Dairy Australia’s latest grain report.

On Monday, the Australian dollar was trading at about US68.5 cents, slightly falling from last week’s highs, with Australian Premium White wheat out of Melbourne fetching $360, compared with $365 last week.

Growing conditions “remaining favourable” coupled with positive yield prospects in southern regions is also putting downward pressure on forward grain markets, the report showed.

Late last week ASX East futures prices weakened, according to a Commonwealth Bank market report, with new crop January ’21 contracts at $299, compared with $302 the previous week.

Old crop July ’20 contracts closed at $332, compared with $342 the previous week.

Meanwhile this month’s commodities report released by ABARES yesterday indicated “abundant” world wheat supplies were anticipated to keep global prices low.

It forecast record high world wheat production of about 767 million tonnes with increased production predicted in Argentina, Australia, Canada and Kazakhstan.

“Despite production in the Russian Federation being forecast to increase year-on-year, the forecast has continued to be lowered as seasonal conditions deteriorate,” the report said.

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Unfavourable seasonal conditions are anticipated to push forecast production in Europe, the US and Ukraine down from last season’s levels.

However ABARES expects a fall in production in some major exporting countries to be offset by weaker world demand for discretionary foods.