IN SPITE of the forecasted big Australian wheat crop, basis levels are holding up, with Australian prices around $17 a tonne above equivalent prices on futures exchanges.
Basis is calculated between cash, or spot prices, and futures prices.
Generally local prices are pushed up by domestic shortages, leading to strong basis levels, and in years when grain is trading on export parity there is the potential for that to come back.
However, Callum Downs commodity analyst Malcolm Bartholomaeus said basis had been consistently strong since the end of August.
“Levels have been between $15 and $21/t since the end of August based on an Adelaide port price and we are currently right in the middle of that range.
“Under the old regulated system, the basis was set at $10/t, so perhaps we are seeing stronger basis than we have been used to, and we are also without the costs involved in management costs.”
He said the strong basis could be based on the opinion that Australian wheat is expected to be of significantly better quality than major rivals in Canada and Europe.
Another factor keeping basis levels positive is the dramatic cut in exports out of the former Soviet states.
“We don’t have that severe competition we had last year, when Ukraine and Russia were aggressively pushing their grain onto the market.”
