Wheat price buzz positive

27 Mar, 2014 01:00 AM
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In terms of new season crop there has certainly been interest in locking away some tonnes.

THE WA grains industry has been abuzz with talk of 'drought premiums' following extended periods of dry weather in Queensland and New South Wales.

Last week, new crop APW wheat in Brisbane traded at $349 (port FIS) a tonne.

But what does this mean for WA prices which saw APW trade at $321/t-$324/t in the same week?

According to Glencore Grain WA manager, Rob Haddrill, it would be hard to tell.

From a marketer's perspective, Mr Haddrill said there had been a fair bit of interest from growers keen to lock in new season grain after price hikes caused by Russian and Ukrainian unrest.

That interest mainly focused on wheat rather than canola or feed barley and lupins.

But he also said previous drought experience on the east coast had demonstrated positive impacts for WA growers in the past which mainly affected the feed grain complex.

Mr Haddrill confirmed that due to the drought some Victorian feed grain had made its way up to Queensland and NSW but the likelihood of having to import it from WA would be slim.

"In terms of pricing it may have a slight influence on WA but we're coming off such a big season here that it may counteract it in some respects," Mr Haddrill said.

"It will all depend on how much carry-over we see in WA."

Mr Haddrill agreed that on paper, WA growers should technically see higher prices paid for feed grain (however he also made sure to mention that one could never rely on a black and white answer).

He also said it would depend on what happened within markets overseas.

"Because WA producers export the overwhelming majority of their grain, the WA market is inclined to align more so with the story of its international markets rather than the east coast," Mr Haddrill said.

"Logistically boats could sail from WA to the east coast if domestic markets purchased WA grain but the east coast markets would have to be really short of stock and willing to pay for ours.

"But until that scenario exists WA price signals will be more aligned with international fundamentals."

Plum Grove senior wheat pool manager Rob Kelly also believed it was hard to tell whether grain prices had much further to climb before they started to slide once more.

He said only about five per cent of last year's harvest hadn't yet been sold by growers although most had been delivered to CBH sites throughout the State.

In many instances it had been a race to lock in APW tonnes before prices started to fall away.

He said the last two weeks in particular had helped prices to be drawn out to where they currently stand (in the $300/t range).

"In terms of new season crop there has certainly been interest in locking away some tonnes," Mr Kelly said.

"Growers in semi-reliable areas with consultants will more than likely have already sold some.

"I suspect those who don't will be in more marginal areas and will be uncertain about what they might have to put up."

Mr Kelly said WA growers who targeted about $300/t were well and truly seeing those kinds of numbers now.

He also pointed to the fact east coast markets had taken off based on the current drought situation.

"It's hard to forecast price given WA hasn't had any significant rain yet," Mr Kelly said.

"If you had have asked me two weeks ago which way I thought the price was going I would have said lower because while there are issues surrounding the Black Sea and its production, the USA winter wheat crop is also in great condition."

Mr Kelly also pointed out that historically it was unusual to see prices hovering around $300/t, especially given the size of WA's most recent harvest.

He said the Black Sea situation had pushed prices to where they are but he wasn't sure how much longer they'd hold on.

"Unless we actually see exports out of Ukraine decline or sanctions to stop Russia from exporting wheat then I'm not sure that we're going to see a lot more drive off the back of the situation," Mr Kelly said.

"WA prices are now relying on the condition of northern hemisphere crops and if our State's farmers haven't seen rain by ANZAC Day then we'll be getting pretty worried."

Northam-based Planfarm consultant Emily Dempster also pointed to the historically unusual price situation given the recent 2013/14 harvest size.

But she said her clients were poised to make the most of it.

She said current WA prices had a really strong basis and many of her clients were keen to focus on cash pricing, which was unconventional for this time of year.

"Usually we're primarily looking at swaps which is a good way of managing production risk before seeding," Ms Dempster said.

"With the basis being so strong it gave us a bit more incentive to look at cash prices at good levels.

"Of our client base the large majority have looked to do something including a mixture of swaps, cash or both."

In the 24 hours before Farm Weekly went to print, Bureau of Meteorology statistics showed weather stations at Bonnie Rock, Bencubbin, Doodlakine, Latham, Darkan and Wagin had received 0.2 millimetres to nine millimetres of rainfall.

So far this month double rainfall figures were recorded at Latham (14.4mm), Bannister (10.4mm), Bencubbin (12.6mm), Wialki (11.6mm), Cadoux (10.8mm) and Pingelly (12.4mm).

Last week some locations, including Beverley, recorded scattered showers of up to 35mm but it certainly wasn't enough to shout "break of the season".

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