Typically over history, Australian wheat has been at a premium to Chicago wheat. It is well documented that our ‘basis’ to Chicago wheat drifted to a discount over the past two years.
This is largely in part due to the supply of a huge crop.
However, in recent times, our wheat has started moving back into positive territory, albeit only just.
The reality is that both physical prices in Australia and futures overseas have been falling, just that Australia has experienced a less sharp decline. The market over the past six months has provided ample opportunity for locking in good pricing levels.
In part some of this improvement in basis is due to the potential for a drier growing period and the likelihood of a much smaller crop than last year (although a long way to go).