Grain Market Update - Wheat (July 2019)

The following graph shows the movement in Chicago (CBOT) December 2019 Wheat Futures price expressed in A$ and the 2019/20 APW Multigrade price delivered Port Kembla. Also included is the 10 year average CBOT December Futures price expressed in A$ and the 10 year average APW Multigrade price at Port Kembla.

Wheat prices have trended higher during May and June 2019, with the basis reducing from historically high levels. Currently the CBOT December 2019 Wheat Futures price is A$289/tonne equivalent and the APW Multigrade price is $352/tonne delivered Port Kembla, resulting in a basis of A$63/tonne. This compares with a basis of approximately A$96/tonne at this time in 2018.

The CBOT Wheat Futures price has increased by approximately A$53/tonne equivalent since April, while the PKE APW Multigrade price has increased by $40/tonne. This significant rise in the CBOT Futures is due to excessive rainfall during the US corn planting window, reducing the size of the potential US corn crop by at least 10%.

The current APW Multigrade price at Port Kembla is approximately a Decile 9 price, calculated on prices from 2009 to date. This is a similar price to 12 months ago.

Assuming freight to port of $38/tonne, the present Multigrade price represents $314/tonne local depot, which should be well in excess of clients’ Break Even Price at budgeted yields.