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.”