Prices depend on having a good global footing

That has prompted some forecasters to suggest a record crop for that state, and a national wheat

crop as large as 32 million tonnes.

A crop that size seems difficult without more help from Western Australia, but we do know that the crops in South Australia, Victoria and NSW will be large.

At the moment, the Australian Bureau of Agricultural and Resource Economics and Sciences (ABARES) has a forecast of 28.91 million tonnes, but that was posted before we had one of the wettest Octobers across southern and eastern Australia in the past two decades.

With wheat prices in Australia sitting above $300 per tonne, growers have been willing sellers off the header.

IKON Commodities, based in Sydney, is saying that this has pushed Australian wheat prices down below Russian prices into South East Asian markets for the first time in four years.

With the trade not concerned at this stage about the ability to accumulate tonnage for export when it is needed, and growers being willing sellers, prices are easing and now look like heading below $300/t.

At the same time, we have had a pull back in Chicago Board of Trade (CBOT) futures after rains have eased immediate concerns about dry conditions in Russia, the US and Argentina.

The risks are not eliminated, but moisture levels have improved significantly for the time being.

CBOT futures are down to A$303.72/t for the start of this week, and basis between CBOT values and our cash markets remain weak.

Any further drop in US futures would make it difficult for our market to sustain price levels above $300/t.

Two weeks ago, we had cash prices in Australia close to $330/t.

As harvest has gathered pace, we have seen the market fall to $300/t, which out-strips the decline in CBOT futures during the same period.

In other words, harvest pressure and willing grower selling has seen basis levels decline.

Weak basis levels were to be expected this year, given that much of Australia has been cut out of the export market in the past three years.

We have to regain market share very quickly to clear this year's big crop - and to do that we have to be competitive against all other exporters into as many markets as we can reach.

Basis is likely to remain weak while growers actively sell off the header, and until we get the next serious rain disruption to harvest.

As of Monday this week, the forecast out to mid-November has little of the way in rain for the bulk of the wheatbelt. That should underpin good harvest progress.