Grain Market Update - Wheat (November 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.

Currently the APW Multigrade price is $377/tonne delivered Port Kembla, while the CBOT December 2019 Wheat Futures price is trading at A$278/tonne equivalent, resulting in a basis of A$99/tonne. This compares with a basis of approximately A$191/tonne at this time in 2018 and $50/t greater than the 10 year average basis.

With the cereal harvest well underway prices have eased as end users wait for significant amounts of grain to hit the market from Victoria and South Australia. This in addition to the poor export price for wheat is expected to limit the upside in prices in the foreseeable future.

Currently there is very little protein premium with approximately only a $5/t difference between APH2 and APW. However, wheat is enjoying a historically large premium over barley with APW trading approximately $60/t higher than F1 barley. This has led to clients prioritising the storage of barley on farm, or selling off the header at a $15-20/t premium over the delivered price.

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

Assuming freight to port of $38/tonne, the present Multigrade price represents $339/tonne local depot, which may not be in excess of clients’ Break Even Price at drought adjusted yields.