Mixed bag on wheat futures prices

At the same time they have increased total exports expected from Russia, while moves in the market, and statements from the Russians themselves, are confirming that the pace of Russian exports is finally slowing.

That has produced a mixed bag for wheat futures mid week this week, with a further decline in prices since the strong finish to the market at the end of last week.

As expected, the USDA has reduced their production and export projections for Australia, in line with ABARES numbers. 

That did not push global supplies down though, because an upward revision for the Canadian crop, and a lift in carrying stocks for the Russians combined to add 800,000 tonnes to total supplies available to the market this year.

Australia’s production has been pegged at 17.0 million tonnes the lowest since 2007-08, with 9mt domestic use and just 10.5mt going for export. That means our carryover stocks will be reduced to balance production with consumption.   

That also means that exports from July to October will be very light this year.

The South Australian and Australian harvests are well past the halfway mark, so the impact of harvest pressure on grain prices should be receding. Prices do seem to be holding up well, and with potential for upside in US futures in the first part of 2019, there should be further support for our price structures.

However, this week’s wet weather will deliver another delay to harvest and could see quality impacted, although Western Australia won’t be affected.

The unknowns will be how well our market rations the available wheat between the domestic market and exports, and what impact the northern Australian sorghum crop will have on grain supply. That is all ahead of us though, while in the meantime there appears to be little reason for our prices to fall significantly from current levels.