Wheat prices fall unexpectedly

Wheat futures have plunged just months away from harvest, but there is optimism the low price may have found its base.

Wheat futures have plunged to $284 a tonne just four months away from harvest.

While growers say they are “not panicking yet”, there are concerns about the flow-on effect for prices domestically.

Episode3 analyst Andrew Whitelaw said this was the traditional time of the year when world events often impacted the wheat market.

“The majority of the world’s wheat is harvested at this time,” he said.

However, even those in the trading sphere and analysts didn’t expect to see the most recent drop.

Chicago Board of Trade wheat has fallen from $410 a tonne at the end of May to $284 a tonne early this week and Mr Whitelaw said there was no guarantee it wouldn’t trade lower.

However, he conceded that the low price may have found its base.

“Basically the world is struggling with wheat at the moment,” he said.

“We are in a situation where there are heavy supplies (in the northern hemisphere) and that is impacting the supply and demand economics.”

Mr Whitelaw said Chicago Board of Trade futures for December showed wheat prices down to $284 a tonne.

Harvest of the crop in Russia. Picture: Andrey Rudakov

In the past couple of weeks, the Australian dollar has also strengthened and is trading at US67c.

“This makes us more uncompetitive as the dollar goes higher,” Mr Whitelaw said.

Farmer, Chris Drum from Banyena in the Wimmera said there was still time for the season to play out. However, he was concerned to see such a large drop in cereal prices.

“I think the volatility in the market is far from over,” he said.

“I don’t think I can see prices getting any lower, though.”

Chris Drum. Picture: Zoe Phillips

Mr Drum said the crops at his place were doing well, and it was good to see some warmer weather after the run of cold conditions.

He has measured 34mm in the gauge for August.

“Things are starting to grow beautifully,” he said.

“Canola is just starting to run, and it will be flowering in a couple of weeks. The cereals have gotten moving in the past two weeks, and they are getting more height,” he said.

However, he anticipated the season to be a little later than usual.

Mr Drum grows wheat, barley, canola, lentils and faba beans.