SOUTH Australian graingrowers have been warned to prepare for lower harvest returns this year, with wheat prices predicted to fall as low as $220 a tonne during the 2013 harvest.
Speaking at the GRDC Grains Research Update in Adelaide on Tuesday, Profarmer analyst Malcolm Bartholomaeus said a repeat of last harvest's price boom – when APW averaged $299/t – was highly unlikely.
"The high prices for the season just gone will trigger increased plantings," he said.
"At average growing conditions this will lift production, closing the gap on consumption and probably triggering a rebuild of global stocks even if global production falls well short of the 2011 record.
"The end result could be prices closer to $220 to $240 per tonne delivered port by November 2013, similar to what we had in 2011."
Mr Bartholomaeus said circumstances could easily change before the end of the year, especially given the industry's reliance on mother nature.
"We've probably got another six to eight weeks of high levels of uncertainty in global grain markets," he said.
"The markets are trading on the weather in South America at the moment, and they will very soon be trading off winter-kill issues, or the potential for it, in southern Russia and in the United States' hard red winter wheat belt.
"All of that uncertainty is going to feed into the market and give us some volatility and spikes which may well see us back up towards the $300 mark but if we are, it will be brief, so everyone would need to be on their toes to capture the opportunity.
"By the middle of the year when we see how that Northern Hemisphere harvest unfolds, I think we'll have a much better handle on it all."
Mr Bartholomaeus said early expectations for this year were for a 20-million tonne rebound in global wheat production, largely on the back of increased acreages planted and a return to normal seasons in Russia, Kazakhstan, the Ukraine, and the US.
"I'm flagging that global consumption may fall again, year-on-year, particularly when the global corn crop comes in late in the year and corn starts to replace wheat in livestock rations. Under that scenario, it's going to go close to adding to global stocks and putting downward pressure on wheat prices.
"On the other hand, any problems with key Northern Hemisphere crops could threaten global production and push prices back up to the $300 level."
*Full report in Stock Journal, February 14 issue, 2013.