Grain Market Update - Wheat (June 2016)

The following graph shows the movement in Chicago (CBOT) December 2016 Wheat Futures price and the 2016/17 APW Multigrade price delivered port. Since April both the CBOT Futures Price and the APW Multigrade price have increased slightly. For the same period, the basis has ranged from a low of A$14/tonne to a high of A$25/tonne. This movement in basis and the slight strengthening in the CBOT price, has provided some brief selling opportunities for growers.

Given high world stocks, a significant increase in global wheat price seems unlikely in the short term. In addition favourable growing conditions to date across much of Australia has the potential to erode the basis in the short to medium term.

Currently the CBOT December 2016 Wheat Futures price is A$252/tonne equivalent and the APW Multigrade price is $274/t delivered port, reflecting a positive basis of A$22/tonne.

The domestic price at present is approximately a Decile 3.5 price, calculated on prices from 2009 to date. This provides little incentive for hedging at current values.