THE world is supposed to be hungrier and more willing than ever to pay good money for Australian food exports, but for graingrowers the whacky market trends of recent years tend to be delivering few of the price rewards their industry has been led to anticipate.
Despite a fast-rising global population and improving living standards in Asia, average global wheat values are flat or falling.
Part of the reason is world grain stocks have actually been building or holding firmly ahead of global consumption needs for the past seven years.
Another critical factor has been an unprecedented slip in global shipping rates bringing new low-cost competition into Australia's traditional export market regions.
Millers in nearby Indonesia now substitutes Australian wheat with imports from as far away as eastern Europe's Black Sea region and Canada.
"In the past 18 months we've witnessed bigger changes in global grain flow than I've seen in 35 years in this game," said GrainCorp managing director Mark Palmquist, the former US trader and global grain business specialist who took the helm at Australia's biggest agribusiness late last year.
This year's Chicago Board of Trade (CBOT) spot wheat futures prices are currently around US500 cents a bushel ($US183 a tonne) after trending well below optimistic December-January highs of US650c/bu ($US240/t), despite bursts of recent busy buying activity.
While international economic signals indicate exciting export prospects do exist for Australian grain, and in some cases rewards are trickling through, including recent strong prices for sorghum to China, the global trade is proving hard work.
Blocks to recovery
Australian exporters' frustrations are being compounded by competition from domestic livestock markets for drought-depleted stocks of east coast grain.
Australia still has abundant export possibilities according to Mr Palmquist, but cheap oil and a surplus of cheap international sea freight capacity have brought more intense grain trade competition right into Australia's export backyard.
The high cost of getting grain out of Australia via our ageing bulk storage sites and an inefficient rail transport network was also chewing into graingrowers' returns.
Mr Palmquist estimated about a third of the value of a tonne of grain was consumed by the costs associated with getting the crop into the global supply chain.
In the US that same cost factor was "substantially cheaper" - about 15-20 per cent.
Meanwhile, the worldwide steel price slump had helped spur on orders for big capacity new generation ocean freighters from South Korean and Chinese shipyards, and these ships operated at up to 8pc more efficiently than existing vessels at sea.
At the same time, older freighters were now running more cheaply than a few years ago thanks to low oil prices, and fewer ageing bulk carriers were being withdrawn from service because cheap values made them less attractive as scrap metal.
On the grain production front, Russia, Ukraine and the Black Sea region had become increasingly influential suppliers to global markets in the past decade, notably to the Middle East and into Asia.
In what would have seemed a laughable situation a decade ago, Mr Palmquist noted some large Indonesian mills just 3000 kilometres from West Australian grain ports now used cheap freight to help fill up to 20pc of their needs with blends of low-cost, low protein Russian wheat and high protein spring wheat shipped from Canada and the US about 15,000km away.
While they may still want Australian quality wheat, overseas buyers were increasingly tempted to shop around for cheaper grain to blend with it.
"It's amazing how so many deflationary forces in the energy, steel and commodity markets have come together at the same time to create these new market conditions," Mr Palmquist said.
Although Australia's depreciating dollar had definitely helped improve our grain export competitiveness in the past two years, many other key grain export nations - notably Canada, Argentina, and Brazil - had benefited from lower currencies, too.
Market analyst Malcolm Bartholemaeus at Avantagri said the restrained prices for Australian export wheat were also a consequence of a five-year surplus in global stocks.
Although export values were typically about $50/t better than early last decade, price growth had been restrained since the 2007-08 global grain shortage (when Australian values peaked at $400/t) because the world had responded by growing much more grain.
Mr Bartholemaeus said world wheat stocks grew an average 840,000t annually in the past five years, although those surpluses may be about to fade to zero this year if current seasonal conditions persisted.
While Australian growers ideally needed export values above a local cash price of $270/t (delivered port) to stay profitable, in Australian dollar terms CBOT average prices at harvest since the peak in 2008 had only crept close to a rewarding $300/t in 2010 and 2012, and lows had been around $220 and $240 in 2009, 2011 and 2014.
Decline odds firming
Deteriorating crop yield conditions in much of Europe and Canada could be about to turn the tide for world wheat prices, with Mr Bartholemaeus noting the odds are firming for a significant decline in world stocks and a price revival.
"It's still a closely watched thing, but there has been improving support for the wheat market in recent weeks," he said.
Yield expectations were drying off in Canada and Western Europe, parts of the US were still too wet and 2015-16 export prospects from the increasingly influential Black Sea region remained uncertain.
"Every major move in the world wheat market since 2007 has been triggered by what's happened in Russia and the Black Sea - if they get dry conditions world prices are up, if they harvesting big crops they swamp the market and it's down again," he said.
"The Black Sea can be quite unreliable as a production area.
"Conditions can quickly turn windy and dry or they get freeze damage, and like Australia they tend to average a crook season every five years or so."
Exportable shortages were further complicated if Russian taxes and other restrictions kicked in.
Mr Bartholemaeus said current estimates suggested global wheat stocks (with the exception of a 2-million-tonne surplus in the US and 6m tonnes in China) would fall by about 10m tonnes in 2015-16 to total about 108m - the lowest since 2012-13, when the market last kicked.
"Given China doesn't export its crop, and like Australia, production from Europe and Canada could be pretty tight, the US might be the last man standing in the global trade, which means we look like moving towards a US price rally."