Steady decline in wheat price

Prices that were well clear of $300/t are now sitting around $285/t, and in comparative terms, WA's FIS prices are close to where we would expect them to be against other port zones around Australia.

Last week saw an extension of the price falls, with March Chicago Board of Trade futures down $A16.78/t, dragging our cash market down by close to $10/t in most port zones. Victoria fared a little better but still has some of the lowest prices in the country.

Big crop estimates for Canada and Australia were released last week, and this has weighed on the market. At the same time, estimates for exports from Russia have continued to increase, with suggestions that the impending export quotas to be put in place in early 2021 will be increased. That is keeping Russia very competitive in global export markets.

Here in Australia there is plenty of wheat located in all port zones. Storages are filling fast, and shipping stems are well filled. Cash-strapped grain growers have been selling, particularly while prices were above $300/t, and even now that prices are lower, some are still selling the last of their harvest, having achieved a strong average price overall.

Our exporters and domestic end users do not have to compete hard for tonnage at the moment, and so our basis level have remained weak compared to what we might normally expect to see.

With harvest still running at a fair pace in southern regions of NSW, Victoria and SA, there is little reason for wheat prices to lift, unless the offshore market stages a sharp recovery.

In offshore markets there is now not a lot happening. The adverse news about the new northern hemisphere crops is already in the market. That has allowed the news about the larger Canadian and Australian crops to dominate and suppress the market.

As winter sets in there will be talk about winterkill issues but the impact of harsh cold conditions won't be fully appreciated until crops break dormancy in a couple of months' time. As such, cold weather may only have a fleeting impact on the markets in the near term.

The main price driver in the short term will be demand from major importers, and how that may impact the global balance sheet into the next northern hemisphere crop. Any speculation that our crop may increase further in size could also be a factor moving forward.