Wheat to ride high on tight global grain supplies

Wheat prices are forecast to lift on back of limited global stocks and rising corn prices.

International wheat prices could hit US700 cents a bushel and stay there until the first quarter of next year. Picture: Zoe Phillips

Tight global grain stocks will mean even the slightest seasonal condition downgrades of international crops will move wheat prices higher in the months ahead.

That’s according to this month’s Rabobank Australia Agribusiness Monthly report.

Rabobank lifted its global grain and oilseed price forecasts following “production concerns and continuing strong demand”.

It now forecasts Chicago Board of Trade wheat prices to hit about US700 cents a bushel out to quarter one next year.

“We have lifted our global grain and oilseed price forecasts as production concerns and continuing strong demand mean stocks will not be replenished this year,” Rabobank said.

“Supply this year will be limited in Europe by cold and dry weather that has slowed winter wheat development, by drought that has reduced US and Canadian wheat production prospects and as a ­result of stymied Russian ­exports.”

The corn price rise globally was also “translating to” ­increased demand for wheat for livestock feed, the bank ­indicated.

Meanwhile canola prices have hit levels not experienced since 1975.

Rabobank found ICE canola reached $C900 a tonne late last month.

This is up 22 per cent month on month.

While local prices ended 15 per cent higher month on month, with non-gm canola ending the month about $A690 a tonne.

“Strong pricing on the forward market and good root-zone moisture in many areas, particularly in NSW, means expanded canola planting will be the feature of the 2021 Australian winter crop,” the bank said.

“Global factors will, however, outweigh local production possibilities in keeping Australian canola prices in the $A600 a tonne (range), out to 2022.”

A Commonwealth Bank market report found global ­future prices continued to make “sharp gains” late last week.

“Tightening feed supply is the predominate driver of the gains,” report author Tobin Gorey said.

As of late last week CBOT July ’21 prices were at $350 a tonne, in comparison to $345 a tonne at the same time the previous week.

Local future prices also made gains, Mr Gorey said.

ASX east July ’21 prices were at $315 a tonne late last week.

This is compared to $311 a tonne the previous week.

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