DROUGHT conditions currently experienced in the USA have had little effect on falling local grain prices in Western Australia.
While current US Department of Agriculture (USDA) predictions indicated a 10 per cent fall in US wheat production (from last year) due to the long-term drought, WA prices continued to fall due to a positive global production outlook.
As Farm Weekly went to print, CBH's APW2 cash price stood at $264 a tonne in the Kwinana zone - a significant fall from the robust $300t-plus price tag seen earlier this year.
According to CBH's marketing and trading arm general manager Jason Craig, while the US drought was a concern, it was not having a large effect on the local market place.
Mr Craig said good looking crops in the Black Sea and expectations of a reasonable crop in Australia had weighed on the market.
That, paired with nervousness about the current political situation in Iraq, had meant uncertainty in the market.
"I think it's really a story of protein and what impact it will have on the protein market," Mr Craig said.
"Any high protein wheat is attracting a premium, that is really some of the effect."
Mr Craig attributed falling wheat prices to a greater level of production.
"Last year's crop was big and I think the expectation is there will be some carryover," he said.
"While demand has been very good, I think prices have come off because of that.
"And of course the new Black Sea crop will be harvested in July and coming out in the August.
"It looks like it's going to be reasonable so that is also obviously weighing on prices."
Mr Craig said the Chicago Board of Trade (CBOT) had been experiencing lows for some time.
"I think people are looking for a bounce," he said.
"I guess all the good crop news is out there in terms of expectations of bigger crops in Australia and a big crop expectation out of the Black Sea.
"But any sort of minor upsets, particularly on the Australian crop, for example, the El Nino (weather pattern) on the east coast or something of that nature could see the market kick up."
Mr Craig said the Australian dollar, which was hovering around USD94c, was also impacting on prices.
"If we could see a lower dollar in the eighties of course that will also kick off prices," he said. Emerald Grain Geraldton regional manager Tom Wake said good prices seen earlier this year had been driven by the Russian and Ukrainian political crisis and the threat that it could put a halt to exports at some point.
"It has been a bit of a non-issue because exports have continued out of there at the same pace as last year," Mr Wake said.
"And people have still been purchasing grain out of there for the rest of this year."
Mr Wake said the other factor was the condition of the US hard red winter wheat crop as it came out of dormancy earlier this year.
"The concerns now are more about quality and localised production levels," he said.
Unfortunately for WA growers, Mr Wake said the market outlook was bearish.
"There is plenty of global supply and very little change in global demand from last year," he said.
"The supply and demand situation is very similar to last year and we still managed to get above $300t locally for APW last year at harvest time.
"So we are not ruling it out but the general view of the market is that it's more bearish."