Australian grain still internationally competitive

Author: Gregor Heard 

Date: 5th June, 2018


In Spite of the rapidly accelerating Australian domestic prices for grain, Australian wheat remains relatively competitive on the international stage.

With United States futures recently dropping around the World Agricultural Supply and Demand Estimates report, it looked as though Australian grain would be priced at a premium to the world market.

However, a whopping four per cent rise in Chicago Board of Trade (CBOT) wheat futures recently, on the back of concerns about the global crop, including Australia’s declining prospects, meant Australian wheat is still somewhat competitive on the world stage, with port prices of about $310 a tonne in most regions.

The prices are most competitive out of southern and western ports where domestic demand is not as strong, however as end users cast their net further afield in the hunt for grain it was expected remaining 2017-18 crop would find its way to domestic rations.

However, the world price means exporters will at least investigate the possibility of putting together further consignments of old crop.

Analysts are saying along with Australia and the US, where the winter wheat crop plant is the smallest in decades, there are emerging issues in the European Union and potentially parts of the Black Sea region.

From here the trade is monitoring the direction of the market.

If there should be another spike in basis it would appear export programs are done for the year.

Some within the industry believe it would be difficult to accumulate large parcels of grain for export.

“Certainly supplies have tightened up in this area and we were one of the ones that had a reasonable harvest last year,” said Grain Producers Australia chairman and Wimmera, Victoria, farmer Andrew Weidemann.

“Most of the barley has already been sold and I would think anyone holding grain would probably look to hold a little longer now,” he said.

“Farmers realise there is unlikely to be too much feed anywhere before at least the end of July due to the late break.

“They will either need to hold grain if they are mixed farmers with their own livestock or they will identify an opportunity in holding the grain and seeing if a further drought premium emerges in the market.

“At this stage you would have to say Australia looks unlikely to produce an average crop for 2018-19, so even if international prices do ease off a little you would imagine basis will stay high and present some selling opportunities down the track.”

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