CBA and Rabobank tip good wheat prices for grain growers
The nation’s grain crop is in the ground. See what market analysts are saying about price prospects.
Grain analysts are forecasting global grain prices to hold firm this year, just as the Australian Bureau of Agricultural and Resource Economics and Sciences is predicting the third largest Australian winter crop on record.
ABARES released its first forecast for the 2021-22 grain season yesterday, estimating the winter crop at 46.78 million tonnes, about 15 per cent lower than last harvest’s near record crop of 55.23 million tonnes.
The bureau is tipping 23.196 million hectares of farmland will be sown to winter crops, marginally higher than the 23.126 million ha record set in 2016-17.
Commonwealth Bank agri commodities strategist Tobin Gorey said Australian grain growers would benefit from tightening global grain supplies — particularly for corn and oilseeds — at the same time they were expecting good yields for their crops.
“We are set for pretty good production and pretty good prices,” Mr Gorey said.
He said the global market was expected to hold up well into next year.
“What’s behind that is corn and oilseed supplies globally are awfully tight, but wheat not so much,” he said.
“But corn and oilseeds are helping to track wheat up as well.
“It will take a couple of seasons to restore that supply comfort.”
Wheat forward prices on the Chicago Board of Trade are tracking about US695 cents a bushel ($A329 a tonne) for December 2021 delivery, rising to US711c/bushel ($A337 a tonne) for December 2022 delivery.
Mr Gorey said Australia wheat growers should expect local prices to hold above $300 a tonne for some time.
Rabobank was less optimistic on global forward prices.
Releasing the bank’s Winter Crop Outlook report for 2021-22, Rabobank Australia senior grains and oilseeds analyst Cheryl Kalisch Gordon said US wheat was forecast to trade at near US650c/bushel ($A287 a tonne) into the first quarter of 2022, before gaining marginally.
Dr Kalisch Gordon said a stronger Australian dollar and good local supply were expected to temper local wheat prices this season.
Australian wheat prices were expected to remain near $300 a tonne, with marginal strengthening in the first quarter of 2022.
Other crops faced mixed fortunes.
“Australian feed barley track prices were forecast to trade at around $250 a tonne over the same period, with some softening in quarter three 2021, and canola prices (are) to remain elevated,” Dr Kalisch Gordon said.
“Strength in the Australian dollar, which we forecast to continue to trade in the high US70 cents range, together with strong local supply, will keep local prices at more modest levels than global price levels would otherwise support.”
Rabobank said about 25 per cent of last harvest’s grain crop remained in farm storage and would weigh on prices.
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