Grain Market Update - Wheat (April 2021)

The following graph shows the movement in Chicago (CBOT) December 2021 Wheat Futures price expressed in A$ and the 2021/22 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 $284/tonne delivered Port Kembla, while the CBOT December 2021 Wheat Futures price is trading at A$294/tonne equivalent, resulting in a basis of -A$10/tonne. This compares with a basis of approximately -A$7/tonne at this time in 2020 and the 10 year average basis of A$21/t, suggesting that there will again be a significant surplus to domestic requirements available to export following this next harvest.

The present APW Multigrade price delivered Port Kembla is A$5/t below the long-term average for this time of year. Autumn conditions have been exceptionally good for the majority of the eastern and southern cropping areas, providing the perfect lead in to main season sowing for many years. The positive seasonal outlook has put pressure on the domestic price, as the industry is still trying to digest the very large 2020/21 harvest.

The reason for this robust international futures price stems from poor growing conditions in the Black Sea area and some regions in North and South  America, where there are concerns regarding the yield potential of their 2021 winter wheat crop.

The current APW Multigrade price at Port Kembla is a Decile 4 price, calculated on prices from 2009 to date. The decile price this time 12 months ago was approximately 8.

Assuming freight to port of $38/tonne, the present Multigrade price represents $246/tonne local depot, which should be in excess of clients’ Break Even Price at expected average yields. However clients will need to monitor their variable expenditure to prevent spending too much on crop inputs.