International wheat prices rally

04 Dec, 2014 04:45 AM
Comments
35
 
Our premiums over the rest of the world were massive

CONCERNS over a winter kill in the Former Soviet Union (FSU) and a lack of fresh news in the market have given international wheat prices a strong kick.

Chicago Board of Trade (CBOT) March 15 futures sat at US603 cents a bushel on Wedneday morning, a sharp rally up of around US50c/bu for the week.

However, in spite of single day rises of up to $12 a tonne in Australian terms, the Aussie market lifted by only $4-6/t.

Chief analyst at ProFarmer Nathan Cattle said the rally’s main implication for Aussie growers would be that the current cash price could be supported.

“Our premiums over the rest of the world were massive, this rally on Chicago will mean they can be supported.”

Carolina Morison, grain economist with Market Check agreed.

“Rather than seeing our prices come off, the rally means Aussie wheat has become more competitive, as we’ve seen with recent sales to Indonesia and Malaysia.”

Mr Cattle said there was an issue with the Russian and Ukrainian winter crop, but added it was difficult to quantify damage at this stage.

“You generally get these winter kill scares as the crop goes in and out of dormancy.

“A point to remember though, is that winter kill is not the dominant feature in losing winter crop yields, it is more like a frost here where it can vary quite a bit in terms of how much damage it causes.”

Mr Cattle said the lack of fresh fundamental news at this time of year meant a disproportionate amount of attention could be placed on winter kill concerns.

Ms Morison said the market was also monitoring the geopolitical situation in the region, with some reports Russia was considering restricting its grain exports.

“There has been a big devaluation in the Russian rouble and prices for crude oil, one of their major exports have also fallen rapidly.

“This depreciation has meant strong inflationary pressure, which the Russian Government is reportedly looking at settling by restricting exports of some of these key products.”

Ms Morison said the international grain market was wary of another situation like 2010, when Russia slapped an export ban on wheat, but said it was unlikely to happen.

“The world is different to 2010, for starters Russia is now a member of the World Trade Organisation (WTO) and is legally bound to abide by international trade regulations.

“Secondly, they will need the income these exports provide.”

FarmOnline
Gregor Heard

Gregor Heard

is the national grains writer for Fairfax Agricultural Media
Date: Newest first | Oldest first

READER COMMENTS

Deregul8
4/12/2014 8:31:42 AM

Thankfully farmers can enjoy these price rises by selling into these spikes this harvest and even for the next harvest. Something that was not possible with the Single Desk. Where would we be without deregulation?
Jed
5/12/2014 7:23:53 AM

Shows how little you know about marketing Grain Dereg. Especially how little and blind you are making uneducated remarks about how AWB ran it Pools and how they took advantage of spikes in the market got better freight deals both rail and sea, watched the dollar and progressed sales as the season developed . They guaranteed payment and all the profit from blending etc went back to the grower including Golden rewards. Quality was guaranteed . Not to mention losing the Industry good functions. D8 you live in fairy land or you just don't want to know the truth.
torobrook
5/12/2014 9:20:46 AM

Read the article Jed. Fairy land exists with you and the likes of you are the ones in denial. The AWB managed single desk system was just that , a system. You quasi religious believers have attributed much mythical virtues to it and just like a believer you can't or won't see otherwise. But who cares about your attachment to your belief. Thank goodness we have the current system with Australian wheat pouring into the world markets and grain growers have this wonderful thing called choice.
Mug
5/12/2014 10:04:41 AM

Well actually we don't have real choice, Torobrook. The AWB was the envy of the world. They made some stupid errors and got caught. The other world marketers joined forces and bought it down with the help of our gutless pollies.
GFA
5/12/2014 11:13:30 AM

When the mega merchants have lined their pockets with our gifted stupidity and we have declined back to a tiny domestic industry maybe the likes of toro and d8 will be wake up to reality. The party will soon be over.
incognito
6/12/2014 4:21:35 AM

$300 per tonne available for 2015 week just gone. Good number, if single desk was able to deliver forwards along side pooling we would still have it but time to move on.
Jock Munro
7/12/2014 4:56:04 PM

Even the merchants admitted at post harvest meetings that they had not committed any grain to export. The AWB would have been in there hedging the crop and liaising with our major customers. We have a sicko system and the crows will eventually come home to roost. Canada our Commonwealth cousin, according to media reports, is also in real trouble with the removal of their single desk. Our rural media seem reluctant to report this.
Consolidated
8/12/2014 6:07:24 AM

The Canadian farmer doesn't own the CWB, the taxpayer does. The media also doesn't report Canada took its canola output from 2mmt to 16mmt because of the restrictions placed on Western province farmers in how they marketed their wheat. Canadian farmers went to jail in the 90s selling wheat across the border to the US because they dispized the compulsory acquisition of their wheat and being paid like a member of a Communist state. No Jock I'd say the Canadian farmer is on the whole very happy that the wheat board is gone. But that won't stop you peddling otherwise.
Dalby
8/12/2014 8:41:24 AM

Some people want it both ways. When prices are up they want to claim it is due to deregulation. However even though the top prices under Single Desk, were 4 times better than todays best prices under deregulation, they claim Single Desk caused prices to be lower. These figures come from Australian Government Authority sources. You just cant put brains or an honest tongue into some people can you.
incognito
9/12/2014 4:46:07 AM

Following changes to the Canadian Wheat Board Act in 2012 by the Federal Government, CWB has always stated its intention to build a strong and viable CWB in the open market. CWB wants to provide farmers with greater choice, increased competition resulting in better prices, secure access to new markets and customers, and the ability for farmers to pool their grain with a company that they know and trust. Recently there has been some speculation and inaccuracies regarding CWB's future and our commercialisation plans.
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