Wheat price pressure

At the same time Chicago Board of Trade (CBOT) December futures closed last week at $203.91 a tonne and down close to $60/t on the price base recorded at the end of November last year.

Early trading this week continued to trend weaker.

A huge lift in world grain production has also cast a bearish shadow over local grain prices despite the dry weather.

Last week the US Department of Agriculture lifted its estimate on world wheat production to 720 million tonnes, up four million tonnes from last month and topping last year’s record large crop of 714 million tonnes.

Robinson Grain Trading commodity trader Robert Lean said Australia’s east coast markets had fallen $20 a tonne in the past week in line with international markets.

The market had softened due to increased global production and potentially record US wheat and corn harvests, he said.

He said the current market was quite a way off export parity to the tune of $30/t based on current Port Kembla track values.

This was being driven by the dry conditions in southern Queens-

land and northern NSW which had increased demand for feed grains.

Lack of rain was also responsible for the minimal amount of wheat being traded on the forward market, he said.

Recent frosts had growers concerned, too.

He said few graingrowers were willing to commit to trade, a trend which was holding the local market up compared to other international markets.

Preston Grain commodity trader Bill Preston, Temora, said there had been hardly any contracts in his area signed to date.

“I think prices aren’t all that exciting to forward sell,” Mr Preston said.

“Most people are just sitting on the fence, but I think if we got a good solid inch in a couple of weeks we might see people fire up and start selling.”

He said recent frosts caused some yield loss in growers’ Gregory wheat, but they were now on track to a good harvest.

Independent agricultural consultant John Hoskings, Quirindi, said the wheat in his area looked a picture, but few had committed it to sale as yet.

“The crops look fantastic at the moment but when you stick a moisture probe into the ground there’s nothing in there,” Mr Hoskings said.

He said the region’s wheat growers needed 50 to 70 millimetres to see them through to harvest.

If it doesn’t come in time, growers will harvest average yielding high protein wheat.

Mr Hoskings held out confidence his clients farming Durum wheat would benefit once sold, most likely on the open market.

“There are a lot of Durum crops around this way and the market prospects look pretty good at the moment,” he said.

“The price is well over $400/t.”

FATHER and son Rodney and Michael Breust, “Longview”, Temora, have 450 hectares of Spitfire and Suntop wheat to harvest in December.

The Breusts aren’t keen to look too far into the future, preferring to take harvest as it comes.

“We haven’t forward contracted our grain for 10 years now because we like to take the risk out of it,” Michael said.

“We take the cash price on the day or warehouse it in Temora and watch it until the time is right.

“Over a 10-year average I think we’ve come out in front,” he said.

The pair were prepared to wait and see what the market handed them later in the year, and had 1000 hectares of lupins and canola to keep them busy in the meantime.

Their crop suffered little damage in the recent frost events which claimed much of the Riverina’s grain crops.

“The wheat is looking really good at the moment and we’re feeling confident about what’s ahead,” Michael said.

“We had a couple of storms about a month ago, and we feel really lucky having had those.”

The Breusts freight their wheat straight into Temora, about 25 kilometres away, and as such won’t be affected by recent silo closures.