Grain Market Update - Wheat (May 2022)

The following graph shows the movement in Chicago (CBOT) December 2022 Wheat Futures price expressed in A$ and the 2022/23 APW Multigrade price delivered Port Kembla. Also included is the 10 year average CBOT December Futures basis for the APW Multigrade price at Port Kembla, plus the corresponding basis for the current year.

Currently the APW Multigrade price is $446/tonne delivered Port Kembla, while the CBOT December 2022 Wheat Futures price is trading at A$578/tonne equivalent, resulting in a basis of -A$132/tonne. This compares with a basis of approximately -A$10/tonne at this time in 2021 and the 10 year average basis of A$27/t. This suggests that there will again be a significant surplus to domestic requirements available to export following this next harvest and that the supply chain will still not be able to efficiently transport this surplus grain to international customers.

International wheat prices are currently 200% higher than average, with the main price driver being supply chain logistics concerns plus a poor seasonal outlook in North America, as well as the ongoing conflict in Ukraine limiting their ability to grow and export grain. While the negative basis is currently very large, the present APW Multigrade price delivered Port Kembla is still A$156/t above the long-term average for this time of year.

The current APW Multigrade price at Port Kembla is a Decile 9 price, calculated on prices from 2011 to date. The decile price this time 12 months ago was approximately 4.

Assuming freight to port of $38/tonne, the present Multigrade price represents $408/tonne local depot, which should be well in excess of clients’ Break Even Price at average yields. However due to the large increases in the cost of most inputs, clients will need to closely monitor their expenditure throughout the season, to ensure profitability.