If we use Australian Stock Exchange (ASX) wheat as a guide for broader Australian price moves, the January contract fell $10/tonne from $395/t to $385/t over the past week.
This largely reflected moves in the Australian Dollar, which rallied sharply against the US Dollar to finish up more than US1.5 cents last week to US$0.65 at time of writing.
At current pricing levels, this sharp move higher accounts for a reduction of about $8/t in the price of Australian wheat.
ASX wheat contracts aim to represent port equivalent prices for APW1 quality wheat in eastern Australia.
If we compare the ASX prices to prices of physical grain on the international market, it indicates that ASX is trading at the export value of Australian wheat.
For example, Australian APW1 wheat is reportedly quoted at US$280/t free-on-board (FoB) ex-eastern Australian export ports.
This pricing level is within US$5/t of the ASX wheat price when converted to a US$ FoB equivalent.
US hard red winter wheat of similar quality to Australian APW1, is reportedly quoted at US$286/t FoB ex the northwest pacific region of the US.
Given the bulk sea freight advantage Australia has into South East Asian markets, it indicates Australian grain should be very competitive relative to other export origins around the world.
But we're also in grain deficit in north eastern areas of Australia, meaning we will consume more than we've produced, and so prices in those areas need to trade above this level for grain to not be exported.
Australian grain prices do not need to fall to remain competitive into international and domestic markets irrespective of recent moves in currency.
Yet we are seeing advertised cash bids at local delivery sites fall across many parts of Australia.
Buyers do not need to push prices higher when growers sell grain into cash bids as they deliver.
How Australian growers sell their grain is influencing the value of their grain.
Growers have a say in the price of Australian grain and can offer their grain for sale at a price rather than accepting cash bids and creating downward pressure on prices.
As an example, 2023/24 season H1 wheat traded $450/t Kwinana last week with the best published bid on the day as collected by independent analyst Profarmer at $422/t.
If the grower had not offered their grain for sale at $450 they may never have known a buyer was willing to pay that price for new season H1 wheat.
There are plenty more examples.
ASW1 wheat traded in Albany port at $400/t compared to the best bid of $362/t and oats traded at $452/t Kwinana compared to the best bid of $436/t.
Many growers that are harvesting or close to harvest are offering grain for sale on Clear Grain Exchange for delivery in a future month such as November, December, or January.
Offer grain for sale and create demand for grain.
For more information or to see what values are trading contact Clear Grain Exchange on 1800 000 410 or email support@cgx.com.au
