The United States Department of Agriculture (USDA) has confirmed two significant factors pressuring global grain prices.
In its September World Agricultural Supply and Demand Estimates, the USDA updated its global forecasts for 2023-24 wheat, corn and soybean production and consumption.
The USDA made some reductions to global wheat production, lowering production in Argentina, Europe, Canada and Australia.
Its Australian wheat production forecast is now 26 million tonnes, which is slightly above the 25.4mt estimated by the Australian Bureau of Agricultural and Resource Economics and Sciences report.
Russian wheat production was predicted by the USDA at 85mt, with some market analysts predicting production above this level.
This forecast, on top of last year's record 92mt output, remains a gorilla weighing on the global wheat market.
Despite the ongoing conflict in the Black Sea region, Russian wheat exports have been flowing in earnest into north African and middle eastern destinations.
The other gorilla confirmed by the USDA is the global corn production forecast, in particular the United States' crop which is up 10 per cent from last year.
As a substitute for wheat in feed rations, plentiful stocks of corn will weigh on global wheat prices.
While Chicago Board of Trade (CBoT) wheat futures contracts are trading at or near-contract lows, buyers are pushing prices higher in Australia.
Locally, buyer demand remains strong with prices generally increasing as 30 buyers purchased grain on Clear Grain Exchange last week with more searching the market for opportunities to buy grain.
This demand is also flowing to grain stored onfarm indicated by similar buyer interest seen in the grain market as buyers search for any grain remaining and bid ex-farm or delivered prices to get it.
Generally, grain held by Australian growers has reduced which is typical for this time of year as they tidy up their remaining sales before the upcoming harvest.
Any grain offered for sale is generating interest, with buyers searching the market, bidding to match offer prices, or bidding against offers for grain that suits their needs.
Strong international buyer demand has Australian export pathways full throughout the second half of the year and domestic buyers are competing to ensure they have grain to meet their demand requirements.
For now, Australian grain prices are acting largely independent of CBoT wheat futures.
At some point the price difference between local prices and CBoT futures may become a factor for Australian grain as it is exported into the international market.
For more information or to see what values are trading contact Clear Grain Exchange on 1800 000 410 or email support@cgx.com.au
