GROWER chatter on social media that a substantial fall in wheat prices had been artificially generated by big buyers to cash in on large volumes of grain has been hosed down by market analysts.
Speaking early last week Andrew Whitelaw, Thomas Elder Markets, said the fall, generally around $40 a tonne, took prices back to around $260/t delivered port for APW wheat in many port zones, with the east coast cheaper than the west coast.
However, since then there has been a rally internationally, yet to flow through to Australian cash prices, sparked by both a positive US Department of Agriculture supply and demand report and the growing belief Russia was set to implement some sort of export tax.
Russian wheat production is set to fall by almost 10 million tonnes year on year and the market believes it is increasingly likely there will be some sort of tax imposed to ensure domestic supply.
Mr Whitelaw said the falls were a result of the world market combined with the big export program in Australia, meaning exporters would need to wait to be able to execute sales due to a lack of capacity.
He said it was within the realms of falls in international values over the past ten days.
"International prices have fallen by around $A50/t, so rather than a larger than anticipated fall the extent of the drop probably hasn't been as sharp as it could have been."
He said improved weather conditions leading into winter dormancy in the northern hemisphere was a key reason for the fall in international values.
Nick Crundall, head of strategy at Market Check, said it was impossible for the market not to drop at the start of the month.
"We've got a massive crop and there are logistical constraints making it less attractive for buyers to buy now and there is also the fall internationally, it is very much to be expected."
"There is no grand conspiracy, it just relates to what is happening in the market and the capacity issues we have."
Mr Crundall said there was still scope for upside into 2021 but added it depended on what happened internationally, along with local conditions.
"You might see it dry next autumn which leads to increased domestic demand or you might see northern hemisphere issues, but we don't know what will happen yet."
He said many growers with good yields had been happy to sell most of their grain given the gross margins per hectare.
"They are happy, even with prices back a bit and for those looking to exposure to the market longer term are looking at managed products and pools."
Mr Whitelaw said while farmers may be unhappy with prices it was important to look the market clearly to make sound decisions.
"If they have a view in the market they need to make sure it is based on the fundamentals, not just what they want to see the market doing," he said.
"If they think it is going to rise, why is that, what is their opinion based on?"
"They also need to think how they want to take advantage of a rise in prices, store grain and sell later, or sell the physical earlier and buy calls, there are plenty of options to consider."
However, grower Jock Munro, Rankins Springs, NSW, said the harvest dip reflected merchants taking advantage of growers.
"There is a lot of instability and after the drought a lot of growers needed to generate some cash flow and merchants are taking advantage of that."
"It's entirely predictable and the only thing stopping it being worse is the fact the world market is reasonably high."
All eyes are now on Russia and what sort of approach it takes to ensure domestic supplies, with analysts guessing at the size and duration of any possible export tax.
Russian president Vladimir Putin sparked the intrigue last week with comments that the cost of bread in Russia was too high.
On the supply and demand side, the USDA has also slashed 4 million tonnes of global wheat production in its latest forecast.
Markets rallied on the back of the news, with ASX wheat futures up $3/t on Thursday and a further $2/t over the weekend , even with the dollar appreciating to its highest levels since 2018, however the headwind of the high dollar has meant the full rise that has been experienced in US futures is yet to translate into Australian prices.