THE RECENT US Department of Agriculture (USDA) World Agricultural Supply and Demand Estimates (WASDE) report contained a late Christmas present for Aussie farmers holding wheat.
After a dropping around $20 a tonne in late December and early January, the market has made up most of these losses, pulling back in excess of $10/t, with cash prices now at around $285/t port for the APW paygrade.
These gains have been made on the back of a 5 per cent boost in Chicago Board of Trade (CBOT) wheat futures, which have crept back up to US785 cents a bushel.
There was a familiar factor behind the gains – dry conditions in the US. The winter wheat belt, including states like Texas, Oklahoma and Kansas remains dry, and acres have either been left out or will be abandoned.
Matt Boxer, SA state manager with Grain Assist, said the report was bullish for old crop, but added the forecast additional acreage across the globe planted as a result of the high prices would drag prices down through the year.
“The report was a bit of a surprise as the market was expecting neutral to bearish news, so it has moved things forward a little.
“However, there’s a lot of acres going in across the world, so that’s probably going to drag things down into the Aussie growing season.”
Emerald general manager of risk and pricing David Johnson said the market was hinting at positive pricing opportunities for Australian growers over the coming months until new crop northern hemisphere grain was available.
“A tight US balance sheet in corn and beans combined with production risk in South America means there will be some old and new crop selling opportunities.”
Along with the US concerns, Mr Johnson said there were production issues in southern Russia and in India, but added that without further issues, production out of the former Soviet states (FSU) will be up 40 million tonnes on 2012.