International wheat futures markets have had little impact on local markets in recent weeks, trading a sideways trend.
The benchmark Chicago Board of Trade (CBoT) March 2024 wheat futures contract closed at 611 US cents per bushel to end last week.
This is just 1.5 USc/bu below the level it closed at on December 22, 2023 before the Christmas holiday period.
There has been limited news items to provide direction to the CBoT markets in this time.
One item of note was the World Supply and Demand Estimates (WASDE) released by the United States Department of Agriculture (USDA) in mid-January.
The report reaffirmed the significant rebound in US corn stocks following above average 2023 production which is expected to lift the US corn stocks to use ratio to 14.8 per cent from to 9.9pc last year.
The impact of the large US corn crop has mostly been factored into global corn prices, however it remains a factor limiting any upward price movement in wheat.
Wheat and corn can be substituted in many feed markets, so cheaper corn will often be used instead of wheat.
Global wheat forecast estimates remain largely unchanged, with global wheat stocks estimates tight.
Excluding China, the wheat global stocks to use ratio is estimated to be 19pc, nearing the previous low of 17.7pc in 2007/08.
The stocks to use ratio reflects the amount of grain on hand compared to what is consumed annually across the world, in this case excluding China.
With limited stocks on hand to satisfy demand, buyers turn to stocks held by growers to secure the grain they require, and appetite for Australian grain appears to have lifted recently.
The world requires Australian grain and the amount of grain that will be exported and consumed domestically this year has not yet been bought from growers.
With harvest completed in most parts of the country, many growers have grain in warehouse and are looking to engage the market.
Growers have been offering their grain at a price they are willing to sell for, often at levels above what buyers are willing to pay.
An offer price is an important input to the market and if growers are not satisfied with current prices, they are able to offer at a level they would be willing to sell.
Recently, buyer activity has been increasing, with more grain transacting as buyers lift their bids to match grower price expectations.
Thirty three grain buyers purchased grain through Clear Grain Exchange last week, more were searching for grain offered for sale.
For more information or to see what values are trading contact Clear Grain Exchange on 1800 000 410 or email support@cgx.com.au
