CBOT wheat futures declined through last week, eroding most of the gains made from the 30 US cents a bushel rally on Friday, February 10, when Russia increased aggression in the Ukraine war.
Other major global wheat futures markets followed a similar course.
The correction lower last week stems some upward momentum that had been building in recent weeks and keeps wheat futures markets inside the sideways trading range since late November.
Flat global grain markets are not unusual for this time of year given the northern hemisphere winter wheat crops are dormant under snow.
As those crops come out of dormancy through the northern hemisphere spring, markets will focus more on crop conditions and weather forecasts which often creates price volatility.
As mentioned last week, there is not abundant supplies of grain in the world, and many are banking on a reasonable harvest in some major world producers during the middle of this year.
No different to Australia, spring weather has a major impact on crop prospects and that's ahead of us in the next few months.
The Ukraine Grain Corridor deal is also set to expire in March, and while the consensus is that it will be extended, it is susceptible to some Putin politically charged comments that may swing markets.
Not to mention the Ukraine war continues and Russian escalation can keep the market on their toes as per last Friday's strong rally.
Locally in Australia, the main driver of prices has been buyers of Australian grain bidding up to match the prices growers are offering their grain for sale.
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Growers and their agents are getting better at showing the market their sell price by offering their grain for sale, rather than simply relying on a published bid for price discovery.
This has helped improve Australian cash prices with prices trading often much better than published bids.
However, as reported by the CGX Market Open Report sent each day, Australian prices remain behind many international trades.
This price difference has been narrowing more recently with Australian grower prices improving compared with international markets trading sideways to downwards.
The Philippines recently purchased 110,000 tonnes of feed wheat at USD $332/t cost and freight (delivered their ports) for June-July delivery.
This worked back to AUD $417/t FIS (Free in Store) WA and $393/t Track East Coast of Australia.
The good news is that it means Australian prices don't need to get cheaper to remain internationally competitive.
Make sure you set your price and offer it for sale at the price you're comfortable selling.
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