Grain Market Update - Wheat (September 2013)

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The following graph shows the movement in Chicago (CBOT) December 2013 Wheat Futures price and the 2013/14 APW Multigrade price delivered port. During late August early September, there were some sound selling opportunities when Multigrade contracts delivered local silo were around $250/tonne. However, both the futures and domestic prices have fallen away recently.

Looking forward, analysts are suggesting that there is more downside than upside in wheat prices for the following reasons:

  • Basis is currently strong

  • US wheat prices are strong relative to corn

  • There is likely to be lower demand for Australian wheat in the short term

  • EU and Black Sea exporters will be competitive

  • Yield forecasts for the eastern seaboard are positive

From a demand perspective, Chinese requirement for wheat is largely unknown and could have a significant impact on price.

If there is to be a spike in prices, it is likely to come in the form of fixed grade contracts during the commencement of harvest, as domestic end users scramble to secure early tonnes.

Currently the CBOT December 2013 Futures price is A$254/tonne equivalent and the APW Multigrade price is $271/t delivered port, reflecting a positive basis of A$17/tonne.

Farm Management, Cropping, FinanceLiz KelleherRural Management Strategies