WE have seen a rapid deterioration of wheat prices in the past week, with not a great deal of news in our side of the court to push them back.
Even at present prices, Australian grain traders aren’t attracting enough buying demand, meaning that our daily cash bids need to go down to make our wheat price competitive with other exporting origins.
Generally speaking as we see CBOT futures deteriorate, we usually see our local basis take up some of the slack, but this did not even happen last week, with basis deteriorating along with the futures market!
While this does not bode well for the likely carry-over of wheat into next season, a year is a long time in the grain game.
With today’s local cash prices in mind; pools or a managed program of some sort (which gives you access to time) may be an alternative option to incorporate into your marketing plan this year.
There is not a great deal of short-term good news, but due to the longer-term marketing window of pools or managed programs, there is opportunity to participate in any upside we may see next year, especially when the northern hemisphere crops come out of dormancy.
Global markets are experiencing a lack of high protein grain, which could be an asset to the Aussie grower, with the higher protein grains we’re seeing harvested here on the Eyre Peninsula, premiums have already began to increase for H1 and H2 grades.
In a pricing environment like this year’s it’s really important to make the most out of your grain and an effective way to do this is to ensure that you’re allocating the most cost effective grades to any forward contracts/pool programs.
If you feel like grade spreads aren’t quite where you’d like them to be at the moment, a pool could be a good option for your marketing mix, as spreads aren’t based on just current values, but demand over the coming year.
