Overseas market drives wheat prices down

The Australian wheat market is under pressure as high supply levels internationally make an impact.

Wheat futures have taken a tumble in the past five days, and Australian growers are watching on as they weigh up their selling options.

The Chicago SRW Wheat Futures are trading at $US522 compared to $US554 on Wednesday last week.

Domestically, ASW old crop wheat delivered to the port in Victoria is making $355 to $365/tonne, and the new crop forward contracts are around $345/tonne.

Market Check chief executive officer Nick Crundall said the decline was due to the fact that the northern hemisphere was in the busiest harvest time.

Crops from Russia and Ukraine had also performed better than the market initially anticipated despite earlier frost concerns.

“There is a lot of supply coming into the market, we are in the equivalent for the northern hemisphere of what we would see here in January for a trading period here,” he said.

“We don’t have good demand at the moment.”

Key buyers, including Turkey, Iran and Pakistan, haven’t been as active in purchasing wheat as hoped.

In the northern hemisphere, buyers also have the option to purchase US corn, which is coming onto the market.

However, on the flip side, Mr Crundall said Australian growers were seeing better prices for canola, with quotes as high as $700/tonne last week.

Jason Mellings farms at Carron.

Jason Mellings, who farms at Carron between Donald and Warracknabeal, said prices were concerning but “not terrible”.

He said the big factor for Australian growers would be the quality of the spring in bringing home crops.

“If we go back a month ago, we were looking at prices of $370 to $385/tonne for wheat, and there was a bit more fat in the system,” he said.

“We just need it to keep on raining from now on, and a lift in the APW price of around $20 a tonne would certainly help.”

Mecardo analyst Nick Booth said the wheat market was under pressure due to the current harvest in the northern hemisphere and carry-over stocks.

He said the Saskatchewan crop report indicated the spring wheat crop was considered 90 per cent good to excellent.

Overall he said importer demand had increased (in the northern hemisphere), coinciding with the fall in prices.

Recent tender activity included GASC Egypt buying 770kmt, out of 2.2mmt offered.

Jordan bought 120kmt, and South Korea bought a boat of US wheat. China also has been active, buying around 1.5mmt in June, representing a 50 per cent increase compared to last year.