A stand-off appears to have emerged in Australian grain markets early in the New Year.
Buyers have lowered their bid prices over recent weeks and growers have generally been reluctant to sell at the lower prices.
The pullback in bids occurred earlier and has been more significant in the Eastern States.
Grain prices in Western Australia were holding relative to the rest of the country but buyer bids have also pulled back more recently.
Growers are returning from the festive period and questioning the pullback in prices.
Most growers appear reluctant to follow it lower and are correctly creating an offer price on their grain and listing it for sale so buyers can at least see where they would sell.
Many offer prices are within the range of prices already traded in the past month.
In some instances, buyers have jumped up to meet those prices and secure the grain, however as a general comment, buyers have been relatively patient.
So, we have a stand-off with quieter trade volumes, particularly in eastern Australia.
The good news for growers is that demand for grain remains.
The amount of grain that will be exported and consumed domestically this year has not yet been bought.
This means grain will trade, it's just a matter of at what price and possibly who moves first - buyers lifting their bids or growers lowering their offers.
In many cases market factors affecting prices will provide opportunity for grain to trade.
For instance, a fall in the Australian dollar helps to increase grain prices at the farmgate and has traded a range of US66-69 cents in the past month, or $17 a tonne in Australian grain price terms.
Just before Christmas, United States soft red winter wheat - of similar quality to Australian ASW wheat - was trading in volume into China.
In the New Year, there are rumours they're in the market for more.
Quoted US export values for soft red winter wheat at time of writing equate back to about $405-410/t FIS in WA and $375-380/t Track in eastern Australia for ASW1 type wheat.
Recent traded prices for Australian APW1 and ASW1 wheat have been $400/t and $390/t FIS respectively in WA, and $375/t and $360/t Track respectively in eastern Australia on low volume.
While Australian buyers have pulled their bids back, they continue to search and look at parcels of grain offered for sale.
At some point buyers will need to purchase and the above price analysis indicates there is some merit in growers showing their expectations on what their grain is worth.
For more information or to see what values are trading contact Clear Grain Exchange on 1800 000 410 or email support@cgx.com.au.
