Volatility in the grain market is likely to continue for some time.
That's the view of CBH Group chief marketing and trading officer Paul Smith who recently stepped into the role, replacing long-term servant Jason Craig.
When considering what has been driving this volatility - and factoring in global weather patterns, he predicts the heightened activity of the past two to three years will be around for "an extended period of time".
Mr Smith made the comments last week as harvest winds up for many WA graingrowers, while others are in full swing and expect to be finished before Christmas.
"We have harvest playing out for growers at the moment and that always creates a lot of interesting developments as that evolves," Mr Smith said.
He said there was a general theme where international markets have trended lower in recent times - ever since they peaked about 18 months ago when Russia starting invading Ukraine.
"We continue to see the wheat coming out of Russia in particular as the global driver of international wheat prices and it is keeping that market heavy," Mr Smith said.
"We are seeing a premium for Australian wheat relative to what I would say generally international prices have been doing - and that is a function of a smaller anticipated crop and exportable surplus out of Australia earlier this year which is causing the market to ration demand somewhat through price.
"We are keen to see China as a really strong source of demand for Australian wheat which they have been for the past two seasons and we continue to see that in the near-term as we go forward."
Mr Smith said they have been seeing a big spread between Australian prices and some other markets.
"That spread is really starting to widen to points to where it is almost becoming unsustainable and there is a risk here that we either need to see international values increase more towards Australian levels to continue to support that - or we might need to see Australian prices potentially shift slightly lower so that we can continue to engage with international markets," Mr Smith said.
He said at the moment, buyers were potentially sourcing their wheat elsewhere.
Mr Smith said they were always looking to develop new markets.
"I think the interesting thing at the moment is that we are seeing a lot of demand coming from China and that includes wheat, but also barley more recently as well," he said.
"They really are competing aggressively to own Australian grain at the moment.
"It does mean we are becoming less transactional with some of our other more traditional markets, for example the Middle East and barley is a good example at, whereby there is a US$60-70 spread between where they are buying Black Sea barley versus we can sell our barley at the moment.
"Having said that, one of our responsibilities is to ensure we always have market access and market development activities occurring and so even if we are not being transactional with any given market at this point in time, we are always focused on engaging with all our customers in our different markets, so that when market conditions do change, we are ready to go to transact with those markets."
When China flicked off the switch for Australian barley three years ago, CBH was able to transition easily into the Middle Eastern markets, however Mr Smith said it was at a cost.
He said the value differential was there but they were still able to support the movement of Australian grain into the market.
China recently announced it had dropped the 80 per cent tariff on Australian barley which was imposed after it alleged Australia was 'dumping' its barley below the cost of production.
There was some expectation with China coming back online there would be an increase in Malt grade barley from Australia, however Mr Smith said it hasn't played out that way.
"We have primarily seen demand for feed barley at this point in time," he said.
"One of the reasons for malting barley, which is a bit of a risk moving forward, is that economically, and more broadly globally, consumers are being a bit more discerning about where they spend their money and the demand for alcohol consumption and particularly beer consumption, has been dropping.
"And we are seeing less demand for craft beers which have a high use of malt."
As a result demand for Malt barley was "slipping away at the moment" and Mr Smith said the outlook was not fantastic in the near-term.
He said reduced demand for Malt barley was not just from China, but globally.
When discussing the current harvest, which is scaled back from the last season's record-breaking tonnages, Mr Smith said reduced volume was one of the key differences.
He said quality was another, particularly around wheat where they were seeing much higher protein crops, as well as high screenings.
Mr Smith said protein levels were a challenge for some growers to manage but it could prove useful in engaging with South East Asian milling customers who typically would seek to source high protein wheat.
"That is something we have struggled to connect with in recent years as we have had a much lower protein profile in the crop," he said.
The challenge however, is given current pricing, Australian grain producers are probably being priced out of that market.
"They are able to source their protein needs from other global destinations or other origination points," Mr Smith said.
As there isn't a current global shortage of high protein wheat, if the WA crop continues to deliver high protein across the board, Mr Smith said there was the risk of developing a surplus.
"It is probably going to pressure our grade spreads and potentially our overall prices as we need to find an outlet for that protein crop, so we will need to connect with these South East Asian markets and middle eastern markets that are currently sourcing cheaper grain from other origination points.