Australian wheat prices show lacklustre trend after the spikes three years ago

Australian wheat prices have dropped nearly 50 per cent from 2022 highs, pressured by a global supply rebound, and high carryover stocks in Australia. See what it means for growers.

Australian wheat prices have dropped sharply from the soaring levels seen in 2022, and are currently trading at around $390.

The price is almost half of the $740 a tonne recorded three years ago according to Australian Bureau of Agricultural and Resource Economics commodity report at the time, which quoted a price range of $730 to $750 a tonne due to supply concerns related to the war in Ukraine.

The significant decline is driven by a rebound in global wheat production, reduced Chinese imports, and high carryover stocks in Australia putting downward pressure on the market.

Farmers keep an eye on wheat prices which are described as subdued. Picture: Yuri Kouzmin

It’s estimated by ABARES that carryover stocks this season could range between 5 and 6 million tonnes compared to a typical figure of 3 to 3.5 million tonnes.

Meanwhile, the current price downturn reflects a global wheat supply recovery following tight markets during 2022.

Some analysis warn that export prices could fall further towards $300 a tonne if global demand fails to pick up.

John Ferrier of Birchip says people would not be confident to forward sell at the current pricing. Picture: Zoe Phillips

This week H2 wheat is tracking at $372 in Melbourne, $298, at Oaklands, NSW, and $376 in Adelaide.

Birchip farmer John Ferrier said at the current levels it would be safe to say not too many people would be confident to forward sell wheat.

“It is a world supply and demand situation and domestically our season hasn’t proven itself,” he said.

Mr Ferrier said the outcome of current prices, which were subdued, was a “wait and see situation” with farmers hoping for yields to bolster the current prices on offer.

“All I can say is we would hope to see a return of prices from 2022 to meet the current levels of production costs,” he said.

At Moree in northern NSW farmers have had close to average rainfall, and at the right time, to provide good yield potential.

However, there is still an element of concern over prices.

Matthew Madden of Moree said he was currently spreading urea on crops. He said at a cost of $850 to $900 a tonne inputs still needed to be accounted for even though he had received 364mm of rainfall for the calendar year.

“That is close to our average,” he said.

“It has been a good season since March, but June was dry,” he said.

Mr Madden said the margins could be worse but at the moment it would be hard to pencil in profits based on the current prices.

“If you have average yields this year there is a possibility you are not going to make any money,” he said.

“You don’t want to be chasing (higher) yields to make up for price downfalls,” he said.