Grain Market Update - Wheat (May 2024)

The following graph shows the movement in Chicago (CBOT) December 2024 Wheat Futures price expressed in A$ and the 2024/25 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 $365/tonne delivered Port Kembla, while the CBOT December 2024 Wheat Futures price is trading at A$368/tonne equivalent, resulting in a basis of -A$3/tonne. This compares with a basis of approximately A$23/tonne at this time in 2023 and the 10 year average basis of A$8/tonne.

Almost universal reports of above average production estimates for the northern hemisphere during the first quarter of 2024, had depressed prices. However, a significant rally in wheat prices has occurred since mid-April on the back of reports of more pessimistic growing conditions, mainly a rainfall deficiency in the eastern Black Sea region, plus insects and disease in Argentina’s corn crops. Due to the scale of Russian wheat production (forecast at 90-95mmt), any change to production or export forecasts, has a massive impact on international grain prices. Due to the current volatility in the region, this presents both an upside and downside risk to local prices.

The current APW Multigrade price at Port Kembla of $365 is a Decile 7 price, calculated on prices from 2013 to date. Assuming freight to port of $38/tonne, the present Multigrade price represents $327tonne local depot, which should be in excess of clients’ Break Even Price at average yields.

However, with the ongoing high cost of most inputs, clients will need to closely monitor their expenditure throughout the season, to ensure profitability.