Australia has the highest wheat price in the world

Australia has the highest wheat price in the world

Grains
Australian wheat was the highest priced on the world export market last year, while Australia also enjoyed the biggest average price hike from 2009 to 2019 according to market researchers IndexBox.

Australian wheat was the highest priced on the world export market last year, while Australia also enjoyed the biggest average price hike from 2009 to 2019 according to market researchers IndexBox.

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In some good news for grain producers, Australia had the highest average export wheat price in the world last year.

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A REPORT by international agricultural market research firm IndexBox has found Australia achieved the highest average wheat export price in the world in 2019, with an average value of $370 a tonne.

This dwarfed the prices achieved by those at the lower end of the scale such as Kazakhstan, $267/t, and Bulgaria, $278/t and was well above the global average of $320/t.

While some of the high export price was due to the competition within the domestic market as drought impacted livestock producers hunted for grain, the high price was just part of a long-term upward curve in relative prices.

IndexBox found that Australia recorded the highest gains in average price for the period from 2009 to 2019.

Grain Trade Australia chief executive Pat O'Shannassy said it was no coincidence this had occurred in the period after Australia's wheat industry had been deregulated.

"It is no surprise than prices are stronger than in the pools era, a big part of that is having more competition in the market and stronger incentive for the buyers to go to the market to accumulate," Mr O'Shannassy said.

"The added competition from the domestic market has kept values high in some years but there have also been high production years so there are other factors at play."

"In particular, more of our wheat is going into freight advantaged markets in south-east Asia, a market that has grown swiftly over the past decade.

"This growth has come as less Australian wheat has headed to the Middle East, where more of the wheat valued was consumed in freight costs."

Mr O'Shannassy said there had also been good progress in creating efficiency gains.

"We have definitely become more efficient over the past decade and that helps overall prices."

He said Australia still retained a reputation for quality wheat.

"Our wheat, low in moisture, good flour extraction rates and with a bright white colour, is still preferred by many end-users but we have to realise that does not extend to an unlimited premium, especially as millers get better at doing more with lower quality wheat."

However, fervent supporter of the former single desk marketing system Jock Munro cast doubt upon Mr O'Shannassy's claims.

"The price rise is nothing to do with competition and everything to do with the droughts we have had which has driven the domestic market up," Mr Munro said.

"How can you argue that competition leads to higher prices, multiple exporters are all competing to win market share and to do so they have to offer the buyers lower prices."

Surprisingly the next highest average price for 2019 was in Ukraine, traditionally a low-cost producer of wheat, with $368/t.

In terms of volume exporters, in 2019 Russia, 32.5 million tonnes, was the leader for wheat, followed by the US, 27m tonnes, Canada, 21.5m tonnes, and France and Ukraine, tied on 20m tonnes rounded out the top five.

Australia, impacted by drought, came in at number 7, behind the top five and Argentina.

Unsurprisingly, Ukraine dominated the charts in terms of the largest growth in volume of exports from 2009-2019.

Mr O'Shannassy said it served as a warning that the world wheat market was increasingly competitive.

"Our competitors are improving the quality of their grain, with better production techniques and better segregations, competition for key export markets is going to continue to get tougher."

Read the full IndexBox report here:

The story Australia has the highest wheat price in the world first appeared on Farm Online.

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