Wheat and barley prices rally on dry outlook in key global regions

As the crop gets bigger so do the prices. Australian grain growers strike it lucky with a price surge in world markets on the eve of harvest.

Golden harvest: While rising prices are working against grain consumers, they are an ideal set-up for grain growers to sell at harvest.

NEXT year’s grain supplies are under threat and Australian grain growers stand to benefit from dry weather restricting potential supplies.

On the eve of harvest in southeast Australia, wheat and barley prices have rallied again, completing a seven-week string of higher prices.

ASX wheat futures are $11 higher this week and cash-price bids from exporters are up $10 a tonne for wheat and $7 for barley.

Australian wheat markets have not maintained the same price pace as those in Europe and the US and have stepped higher than last week’s $3.90 a tonne lift in Chicago wheat futures.

World markets are supported by potential production limits on the cheapest sources of the major traded grain commodities, namely wheat, barley, corn and soyabean.

Russia and neighbouring countries who export their grain through the massive grain terminals on the Black Sea, are still struggling for adequate planting rain. Analysts estimate that 70 per cent of the Russian wheat crop has been planted and time is running out for the balance to be planted before winter sets in.

Despite this, no official grain forecasts suggest reduced production numbers for next year and if rain does fall, the market could react swiftly by removing the risk premium built into the prices. Russian officials continue to discuss possibly restricting exports for a domestic buffer supply.

A similar picture exists with the planting of the summer crops of corn and soyabean in Argentina and Brazil.

Accordingly, in Chicago, corn futures surged $9.50 a tonne and soyabean futures increased $17.50 while canola futures in Winnipeg spiked $18.60 a tonne for the week.

Canola crops will be some of the first to be harvested and cash prices in the Melbourne/Geelong port zone are $7 a tonne higher and $10 higher in the Port Kembla zone.

Australian Premium White bids are now sitting over $300 a tonne delivered to most up- country receival sites in Victoria and the Riverina.

While escalating prices are working against grain consumers, they are an ideal set-up for grain growers to sell at harvest.

According to brokers, NSW growers have been aggressive pre-harvest sellers this year as their crops are exceptional and they are eager for cash flow.

Victorian growers are not recovering from the same income drain and have had less confidence in their yields.

Those who also grow cereal hay are gaining some insights into the 2020 grain harvest, namely grain yields should be above average, and the wet conditions may affect quality.

Grain industry crop tours are also indicating that wheat and barley yields are also better than many expect with Wimmera yields for wheat estimated at 3.7 tonnes/ha.

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