GRAIN marketers are warning growers not to hold out for unattainable grain prices as wheat prices dip below $300 a tonne.
WA growers have made little movement to forward sell grain despite rains firming up their season and marketers are concerned this is largely because the $330-plus prices seen in June and July have passed.
CBH wheat trading manager James Foulsham said the attractive $300 mark could be a trap for growers.
"If people get a lot of good rain and you know there will be good yield out there, you have to be conscious of not being too precious on price," he said.
"If you are making money selling at $298, then it might not be worth waiting on a chance it could go up to $350 because it might not happen."
Mr Foulsham said pricing for wheat was profitable for most and despite renewed confidence in the season, growers were waiting.
"The price of wheat in WA has just dipped below $300 and it's been above $300 for quite a long time," he said.
"I'm sure if you had another pop in the market and it got well above $300 again I think there would be a lot of growers selling.
"The price is not terrible at the moment, but it's not as high as it was the other week so people have seen these higher prices and they're kind of prepared to wait a little bit and see what happens.
"If there was a run in the market there would be an increased rate of selling from the growers."
Mr Foulsham warned of a glut in wheat worldwide which could affect prices in Australia closer to harvest as the market would already be flooded with the northern hemisphere supplies.
"It looks like there will be a big crop in Russia and Europe and conditions in Canada are looking okay," he said.
"Australian wheat has been expensive relative to Black Sea and European wheat, particularly for the past year or so.
"The fact that it looks like there's going to be a big crop and we will need to move the grain, you're really going to have to go in some of the non-traditional markets where you're competing with the Black Sea and that will potentially put (downward) pressure on the price."
Mr Foulsham said WA's traditional market of Indonesia would always source local grain, but the normally reliable markets in the Middle East were seeking cheaper origins.
"The Middle East, which often buys a lot of Australian wheat, has really been switching away to Black Sea wheat over the past 6-12 months because Australian wheat has just been so expensive," he said.
"A lot of the trade has been bearing that in mind and you may see that affect the wheat prices a little more this year, particularly if there's a big crop there that we need to compete with price-wise.
"Over the past 5-10 years there has been Middle Eastern countries such as Iraq, Iran, Saudi, Yemen that have historically bought a lot of Australian wheat, but with big Black Sea crops sometimes $50-60 a tonne cheaper, a lot of those markets are switching."
ProFarmer chief analyst Hannah Janson said the soft price environment had mainly been created by United States influences, with only a small price adjustment being made as the WA rain created a less risky crop situation.
"We did not get the full rise in June that was seen in the US, but we also did not get the full drop in recent weeks as the Chicago Futures dropped, so we have definitely had a buffer from the big changes in the price seen elsewhere," she said.
"Everyone is pretty comfortable with how the world is looking, but we would suggest as the Australian crop gets to late August and into September there could be quite a lot of attention on the Australian crop, particularly given there is an active El Nino and globally there is some uncertainty about the supply of high quality milling wheat.
"Subject to how our crops finish up, Australia could be well positioned to fill a gap in the global supply of quality wheat this season. "
Ms Janson said forward contract decisions had growers taking into account the conditions and the potential for risks to crops in the remainder of the season.
"We have still got the rest of winter and spring to get through to harvest, so while a lot of people will be feeling a lot more confident that does not mean prices are good enough to warrant taking on the production risk of forward sales," she said.
"I imagine for most they would be weighing up the production risk against their profitable price targets based on their yield estimates.
"Our calculations show APW Melbourne/Geelong values are below decile five levels and this is not attractive enough at the moment to be making forward sales with the critical spring growing period ahead of us and the production risk associated with this coming period."
MarketAg independent grain marketing advisor Mark Pontifex said not only was grower confidence evident following the late July rain, but so was confidence within traders.
"We have also seen the first round of first-in, first-served shipping capacity secured last week, which when added with the long-term shipping agreements sees 12.7mmt of shipping capacity already secured by grain buyers," he said.
"We have seen 13 merchants secure shipping capacity which is always great to see."
Mr Pontifex said a soft market finish to the season would be preferred, giving way to stronger prices as the quality of Australia's crop became apparent.
"Unfortunately, the rains in WA have coincided with some good rain events through Canada which stabilised their crop production, combined with increased harvesting activity in the northern hemisphere.
"This northern hemisphere harvest has actually been better than expected and this had put downward pressure on international prices.
"Wheat basis levels, which is the difference between our local prices and the international market, have strengthened in recent weeks.
"So too has canola basis relative to Canadian futures prices.
"Even though local cash prices have declined from recent highs, our prices haven't slipped as much as international levels, which is good for local growers."
Mr Pontifex said as most regions were tracking on average or slightly better crop potential now, a kind August and September could make way for a great season for WA.