RUSSIA'S drought and the risk of a wet harvest in Australia and potential quality downgrading provides an explosive mix for global wheat markets in the coming weeks.
Uncertainty over Russia's 2021 winter wheat crop has stalled farmer selling on the current crop as they wait for rain.
World wheat prices have jumped 15 per cent in the past four weeks amid supply uncertainty.
Chicago Board of Trade wheat futures gained 5pc last week, posting new six-year highs after Russia's weather forecasts turned drier, removing much-needed rain to germinate winter wheat crops before freezing temperatures arrive in the lead up to winter.
Russia's Southern Districts, the heart of countries wheat belt, recorded its lowest rainfall in the through August, September and early October in the past 30 years, casting doubts over the size of next year's crop.
Strengthening world wheat prices at the onset of the harvest window is welcome news for Australian farmers, where the focus has turned to harvest and grain quality.
La Nina related unsettled weather has raised the risk rain during the harvest window and potential quality downgrades.
Global traders will also be watching Australian's harvest weather, nervous about a major quality downgrade.
Major wheat importers are far more dependent on Australian wheat as they struggle to secure wheat from tight-fisted Russian farmers.
A wet harvest would only add to the current global price volatility.
Rising global wheat markets, uncertainty over grain quality with the increased chance of a wet harvest has slowed farmer selling putting upward pressure on local prices.
ASX wheat futures rallied to $322/t on Monday, up $10/t for the week.
Barley values were generally steady, where global markets are less concerns about the Russian drought.
CBH were upbeat about Australia's wheat export potential, saying "the world needs Australian wheat" from December through to June 2021 after a small European wheat harvest.
Relatively expensive Russian wheat for this time of the year will also help Australian exports, they said.
Wheat harvesting is underway in all states apart from Victoria.
Unsettled weather has slowed harvest progress across southern Queensland and northern NSW.
The threat of storms and rain has turned the 2020 harvest into a race against nature to get crops harvested and into storage before the inevitable major rain event.
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