THE TENTATIVE spike in wheat prices over the past six weeks has roared into life as a full blown rally, with new season Australian APW wheat crops pushing above $300 a tonne for the first time in over 12 months.
The rally has been given fuel by a US Department of Agriculture report last week that estimates the US has planted its smallest wheat crop in terms of area since 1919.
The year on year figures suggest a 13 per cent fall in wheat plantings.
Weather has also played a big role in the rally, with hot and dry conditions in northern US wheat producing states causing concerns surrounding the spring wheat crop.
The news from the USDA, combined with the dry, sent futures market into a frenzy.
Both the Chicago and Kansas wheat futures contracts traded limit up, posting US30 cents a bushel price rises.
Minneapolis, the major spring wheat futures contract, which has been trading at a healthy premium to both Chicago and Kansas, also posted gains.
The rally was not limited to the US – in Europe, major futures exchange such as the French contract MATIF, posted solid gains, with issues with dryness in the European crop also emerging.
Domestically, the ASX wheat futures contract sits at $303/t.
While there were patches of good rain in northern NSW and welcome shower activity across SA in the past week, generally Australian crop conditions remain poor.
Many analysts are now suggesting a wheat crop in the 20-22 million tonne mark, well below official forecasts.