The following graph shows the movement in Chicago (CBOT) December 2018 Wheat Futures price and the 2018/19 APW Multigrade price delivered Port Kembla.
New crop wheat prices have steadily increased since January 2018, driven by the late break and demand for stock feed. The domestic price delivered port for the 2018 crop has risen approximately $90/tonne since January, while the futures price has risen only A$20/tonne equivalent. This has led to a basis increase of approximately A$65/tonne for the same period.
Currently the CBOT December 2018 Wheat Futures price is A$251/tonne equivalent and the APW Multigrade price is $347/tonne delivered Port Kembla, reflecting a positive basis of A$96/tonne. This compares with a basis of approximately A$33/tonne at this time in 2017, a reflection of current domestic demand for livestock feeding.
The current domestic price at Port Kembla is above the Decile 9 price, calculated on prices from 2009 to date. This compares to a Decile 5 price at the same time last year.
Assuming freight to port of $38/tonne, the present Multigrade price represents $309/tonne local depot, which should be well in excess of clients’ Break Even Price.