Clear Grain Exchange says Aussie wheat is in demand

Forty three different grain buying businesses purchased 42 grades totalling 212,314 tonnes of wheat, barley, canola, sorghum, oats, lentils, peas and faba beans through Clear Grain Exchange last week.

More buyers were searching grain offered for sale and lifting their bids to try and secure grain offered or to attract more sellers to offer grain for sale.

The demand is nationwide with grain trading across 17 port zones in Queensland, New South Wales, Victoria, South Australia and Western Australia.

Last week was a continuation of improving demand and prices over the past month and is in contrast to weakness in Chicago Board of Trade wheat futures which have traded down near contract lows.

Let's consider the factors driving demand for Australian grains.

A month ago, Russian grain was being exported into global markets at record volumes and the cheapest prices in the world.

Offshore consumers could use Russian wheat as a data point to bargain grain prices lower, particularly when the northern hemisphere harvest is currently underway.

This saw many buyers taking a patient approach to accumulating grain as they felt comfortable supply would be available and they could buy as they needed at possibly lower prices.

The cheap Black Sea wheat dynamic has changed considerably.

Prices out of the Black Sea are now increasing, and you can put higher risk, and costs, of execution from the region on top of that.

It has seen offshore buyers wanting to secure more safe and reliable supply from Australia.

The announcement from China that the tariff on Australian barley was removed added to this heightened demand across all grains.

Australia has finite export capacity and the renewed demand for barley meant buyers of other grains must now compete with barley for space in the supply chain.

The export pipeline out of Australia into the back end of this year appears to be filling up which has had a flow-on effect to domestic consumers who have also had to secure supply.

Forecasts for the Australian 2023-24 harvest remain patchy with many areas likely to produce less than recent years, particularly in WA, northern NSW and Queensland where the Darling Downs has been trading a drought market and importing grain in recent months.

Traditionally international buyer demand swings to the northern hemisphere exporting countries at this time of year as their crop comes to market.

However, this year offshore buyers are in the market for Australian grain in earnest.

A fuller export pipeline in the second half of the year may hopefully bode well for support to Australian prices.