The wheat market has come under a lot of pressure in the past two months, but does it still offer a value?
The first chart below shows the ASX and CBOT wheat price for this coming harvest as a weekly average. The CBOT market peaked in mid-may at A$646 but has now fallen back down to A$490/mt.
This is a fall of 32%, at a local level, the ASX wheat contract has only dropped 12%. The futures market has fallen at a much faster pace, bringing our spread closer to positive.
The second chart below shows the spot price for wheat going back to 2010; pricing levels are still strong, for both old and new crops.
The average price from 2010 to the present for each of these zones is below.
- Kwinana A$306
- Geelong A$293
- Port Kembla A$304
Whilst basis remains negative; we at least have the benefits of decent-sized crops to sell. Whilst prices have taken a hit, they are still strong.
The market is still quite tight, and there are a lot of geopolitics involved. The price could easily rise higher, just ensure that you don’t get greedy.