Grain Market Update - Wheat (December 2022)

Wheat

The following graph shows the movement in the 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 $410/tonne delivered Port Kembla, while the CBOT December 2022 Wheat Futures price is trading at A$401/tonne equivalent, resulting in a basis of A$9/tonne, almost the highest basis for the entire growing season. Long term basis data for this time of year is limited, however it is expected that the current basis is only $10-20/tonne lower than the long term average.

Domestic factors, such as harvest pressures and export logistics appear to be a less significant determinant of price at present than in previous seasons. However, with the large quantity of poor quality wheat being delivered, this may put pressure on prices for lower specification grades as harvest progresses.

The current APW 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 8.

Assuming freight to port of $38/tonne, the present APW Multigrade price represents $372/tonne local depot, which should be well in excess of clients’ Break Even Price at average yields.