Wheat prices globally continue to rise sharply on the back of the issues with the Russian crop, with prices at their highest in close to a year.
Chicago Board of Trade wheat futures saw significant gains of 5 per cent earlier in the week to be 28pc higher than a month ago at US692 cents a bushel.
Locally, old crop prices are sitting at around $375 a tonne for APW grade, with a spike over the past month.
Regional basis is beginning to open up, with demand from livestock producers in parched southern Australia sending grain for immediate delivery in southern areas higher.
But it is the northern hemisphere dominating grains news at present.
Commonwealth Bank agricultural economist Dennis Voznesenski said the global rally had come in spite of improving seasonal conditions in North America and stabilising crop estimates in Europe.
"Parts of Canada have received welcome rain, while in Europe parts remain too wet but it is stabilising somewhat," Mr Voznesenski said.
"The wheat market has been driven by a continued deterioration of Russian crop prospects, with more downgrades likely to come in the next couple of weeks," he said.
Mr Voznesenski said the geopolitical situation in the Black Sea was also being closely monitored.
"Over recent times grain has been able to move from Ukraine relatively freely, but the market is always assessing whether this will be the case going forward, if Russian offensives impact that ability for Ukraine to move grain then it would place further upward pressure on wheat prices."
Andrew Whitelaw, Episode 3 commodity analyst, said the market was trying to get its head around the full extent of frost and drought damage in Russia.
"The US Department of Agriculture (USDA) is flagging a drop of 3.5 million tonnes year on year to 88m tonnes."
"While this is a significant fall it is important to note it would still be third biggest Russian crop on record."
Other forecasters have slashed more grain off their forecasts, with the Rusgrain Union estimating the wheat crop at 86.8mmt, and Sovecon down to 85.7m tonnes.
He said local Russian prices would be an important barometer for markets trying to gauge the extent of the damage in light of conflicting forecasts.
"The wheat price in Russia has increased in recent weeks as concerns regarding the crop were noted."
Gregor Heard
Gregor Heard is ACM's national grains industry reporter, based in Horsham, Victoria. He has a wealth of knowledge surrounding the cropping sector through his 15 years in the role. Prior to that he was with the Fairfax network as a reporter with Stock & Land. Some of the major issues he has reported on during his time with the company include the deregulation of the export wheat market, the introduction of genetically modified crops and the fight to protect growers better from grain trader insolvencies. Still involved with the family farm he is passionate about rural Australia and its people and hopes to use his role to act as an advocate for those involved in the grain sector.
Gregor Heard is ACM's national grains industry reporter, based in Horsham, Victoria. He has a wealth of knowledge surrounding the cropping sector through his 15 years in the role. Prior to that he was with the Fairfax network as a reporter with Stock & Land. Some of the major issues he has reported on during his time with the company include the deregulation of the export wheat market, the introduction of genetically modified crops and the fight to protect growers better from grain trader insolvencies. Still involved with the family farm he is passionate about rural Australia and its people and hopes to use his role to act as an advocate for those involved in the grain sector.
