The following graph shows the movement in Chicago (CBOT) December 2018 Wheat Futures price and the 2018/19 APW Multigrade price delivered Port Kembla.
Wheat prices have steadily increased since January 2018 with the domestic price delivered port rising approximately $40/tonne as a result of the Futures price rising approximately A$30/tonne equivalent. This has led to a basis increase of approximately A$10/tonne for the same period.
Currently the CBOT December 2018 Wheat Futures price is A$260/tonne equivalent and the APW Multigrade price is $302/tonne delivered Port Kembla, reflecting a positive basis of A$42/tonne. This compares with a basis of approximately A$5/tonne at this time in 2017, a reflection of current domestic demand.
The current domestic price at Port Kembla is approximately a Decile 8 price, calculated on prices from 2009 to date. This compares to a Decile 1 price at the same time last year.
Assuming freight to port of $38/tonne, the present Multigrade price represents $264/tonne local depot, which should be well in excess of clients’ Break Even Price.