Grain Market Update - Wheat (July 2023)

The following graph shows the movement in Chicago (CBOT) December 2023 Wheat Futures price expressed in A$/tonne and the 2023/24 APW Multigrade price delivered Port Kembla. Also included is the 10 year average CBOT December Futures price expressed in A$ and the 10 year average APW Multigrade price at Port Kembla.

Wheat prices have begun to fluctuate significantly since June, largely due to international factors. Cheap Russian wheat, is currently being exported to the main importing nations, including Australia’s main wheat customers in Asia. This supply of cheap wheat has put downward pressure on local prices. Currently the CBOT December 2023 Wheat Futures price is A$363/tonne equivalent and the APW Multigrade price is $347/tonne delivered Port Kembla, resulting in a negative basis of A$16/tonne. The average basis at this time of year is approximately positive A$26/tonne.

The northern hemisphere cereal harvest is now underway, which could provide some volatility in the market over the next two months, as quality and quantity of grain available becomes clearer.

Despite the negative basis, the current domestic price is $26/tonne higher than the long term average. This coupled with a full soil moisture profile, provides the opportunity for growers to generate good returns, even with average conditions from the present until harvest. However, managing expenditure, particularly Nitrogen and fungicide costs will be important.

The current APW Multigrade price at Port Kembla is approximately a Decile 7 price, calculated on prices from 2011 to date.

Assuming freight to port of $38/tonne, the present Multigrade price represents $309/tonne local depot, which is above clients’ average Break Even Price of $273/tonne at budgeted yields.