Market Morsel: This year and next for wheat.

Grain | 3rd October 2023 | By Andrew Whitelaw

Current Season

The bulk of the world has been harvested. This gives an element of certainty to what volumes are going to be available until the next northern hemisphere harvest.

The global wheat market has come under immense pressure in recent months. It has bounced to the high A$330s but consistently struggles to maintain that level. December futures are currently trading at A$326.

The local price remains strong and has actually improved compared to overseas values. Local conditions are providing Australian growers with a premium. There is rain forecast for this week in NSW/VIC; whether this will come and what impact is yet to be determined.

This year, we are likely to maintain a strong premium over overseas values.

Next Season

It’s probably worth keeping an eye on the forward months as well. It won’t be long before the next harvest is swinging back around, and we’ll be talking about pricing.

So what is the market providing for the next harvest?

Currently, the ASX contract is at A$416, and Chicago wheat futures are at A$383. Historically, these are strong numbers and would be considered attractive for most. Let’s outline some, but not all, of the things that need to be considered when locking in a price for next year.

  • Will next year be dry for Australia? If the answer is yes, then we may see our local price rally further ahead of overseas values.
  • Will the invasion in Ukraine end? There are still major issues in the black sea nations in relation to planting a crop. Will farmers in Ukraine continue to be able to plant a crop, with high input prices and low grain prices?
  • Grain is being exported from Ukraine despite the lack of agreement from Russia. Will we see Ukraine almost back to normal, and, therefore, larger volumes available on the market?
  • The global stocks of wheat are dicey, especially in relation to the main exporters. Will there be another issue anywhere else in the world that will reduce production?