Grain Market Update - Wheat (June 2020)

The following graph shows the movement in Chicago (CBOT) December 2020 Wheat Futures price expressed in A$/tonne and the 2020/21 APW Multigrade price delivered Port Kembla. Also included is the 10 year average CBOT December Futures price expressed in A$ and the 10 year average APW Multigrade price at Port Kembla.

Wheat prices have continued to decline from the highs seen in March, with the basis increasing A$17/tonne. Currently the CBOT December 2020 Wheat Futures price is A$275/tonne equivalent and the APW Multigrade price is $302/tonne delivered Port Kembla, resulting in a basis of A$27/tonne. This compares with a basis of approximately A$63/tonne at this time in 2019.

The CBOT Wheat Futures price has decreased by approximately A$49/tonne equivalent since April, while the PKE APW Multigrade price has decreased by $32/tonne.

This significant fall in both the domestic and international price of wheat is largely due to expected reductions in wheat demand due to COVID-19 and the flow on effects of the Chinese tariff on barley. Despite the fall in prices, this still represents prices higher than the long term average.

The current APW Multigrade price at Port Kembla is approximately a Decile 6 price, calculated on prices from 2009 to date. This is significantly lower than this time 12 months ago when it was a Decile 9.

Assuming freight to port of $38/tonne, the present Multigrade price represents $264/tonne local depot, which is in excess of clients’ Break Even Price at budgeted yields.