![Even weather damaged old crop is likely to find a home easily given increased domestic demand. Photo by Gregor Heard. Even weather damaged old crop is likely to find a home easily given increased domestic demand. Photo by Gregor Heard.](/images/transform/v1/crop/frm/5Q2j7ezUfQBfUJsaqK3gfB/d0e879a7-f3a4-4dfa-ab48-2737ad665959.JPG/r0_307_6000_3694_w1200_h678_fmax.jpg)
The international wheat market continues to catch fire on the back of increasing concerns about production in Russia along with wet weather in other key grain producing nations.
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Chicago Board of Trade (CBOT) July futures yesterday reached US694 cents a bushel, a ten-month high.
However, locally price rises have been more subdued, with a low basis in comparison to international values apart from in Western Australia where there is increasing concern about the health of the new crop following ongoing dry conditions throughout autumn.
Andrew Whitelaw, Episode 3 commodity analyst, said international price rises were reflecting a classic weather market.
"We've had dry conditions in Russia, then that has been exacerbated by a frost there which is likely to impact on tonnages," Mr Whitelaw said.
"There have been floods in Brazil and now parts of the US corn belt we're seeing the market increasingly monitoring the dry conditions in southern and western Australia," he said.
"All in all it has been enough to send markets up, but equally a change in the weather conditions would be enough to drag prices back down."
Sam Roache, Flexi Grain senior trader said wet conditions in Europe were also important for Australian growers.
"We don't need to look to US futures for the full impact of the price gains for Australian growers," he said.
"It is very wet in France and they are a key competitor on both wheat and barley into China, so that is one to monitor."
"The dryness out of Russia and to a lesser extent Ukraine also is important in the context of the China market."
The price rises come after grain prices fell to their levels in almost four years earlier this year, with CBOT wheat values up close to 30pc on their lows.
Mr Roache said contacts from Russia suggested the wheat crop there could drop as low as 88 million tonnes, with some other agencies tipping even more drastic cuts.
"It is certainly a significant problem."
Locally, he said there had been a brisk export program that was sucking up a lot of carryover stocks, while an increase in demand from southern end users on the back of unseasonably dry autumn conditions was also supportive of values.
"Based on the export business we can see written, with the export program continuing right through to October and the increased likelihood the southern domestic market will be looking for supplies right through the winter it is likely we're going to see very low carryover stocks by the time next harvest rolls around."
"The bulk of the remaining stocks are in Victoria, with demand from both South Australia and NSW strong, so we're likely to see even weather damaged grain keenly sought after."
Mr Roache said prices for new crop wheat were currently above $400/t.
"It certainly presents an opportunity for many growers, even with the concerns for some about a dry start to the season."
A US Department of Agriculture (USDA) World Agricultural Supply and Demand Estimates (WASDE) report this week continued the momentum in wheat.
While wheat stocks were forecast to be the highest in four years, the USDA estimate was significantly lower than trade projections.
Meanwhile, this month's Grains Industry Association of Western Australia (GIWA) update continues to cut likely planted area, particularly in northern and eastern regions as the dry continues to bite.
The association cut its wheat plantings for this season to 4.7 million hectares, compared with an April forecast of 4.96 million hectares.