Appetite for Australian grain remained strong last week with 37 different buyers buying grain through the Clear Grain Exchange and many more looking for grain on offer.
The world remains nervous about how it will source its grain. This has been the case for some time now, with poor harvests in the Northern Hemisphere last season putting Australian grains in an enviable position of being the world’s leading source of grain.
More recently, the conflict between Ukraine and Russia has prolonged these global supply issues into the latter stages of this year, as the market grapples with the disruption of grain from these major suppliers.
On top of that, we are now in the traditionally volatile time of the calendar year for world grain markets.
Northern Hemisphere crops are vulnerable in their spring, and everyone expects what production might be before it becomes available in the middle of the calendar year.
This year, there are a few important articles circulating on Northern Hemisphere production estimates. Dry conditions in China and poor harvest conditions in the United States.
At the root of all this is the very high cost of agricultural inputs.
The global market is therefore nervous, and rightly so. Australian grain, where it is currently plentiful, is therefore in demand.
Chicago Board of Trade May Wheat hit over A$530 a tonne in overnight US trading on Monday Australian time, reflecting an increase of more than 7% over the week.
Since early April, CBOT futures (December 22nd and March 23rd delivery) have risen more sharply to now trade at similar levels to the spot month, reflecting growing uncertainty over the supply of the market. ‘northern hemisphere.
Previously, the coming months were trading at a discount as the market expected there to be more wheat in the world by the end of 2022.
Here in Australia, price differences between port areas continue to be extreme in some cases.
This is due to very localized supply and demand factors that affect pricing, such as grade quality, availability, buyer needs, and supply chain capacity relative to what is covered.
For example, wheat stored at Geraldton and Esperance continues to trade $30-40/t above Kwinana WA values. APW1 in South African ports reached 440 t at port while Melbourne reached $412/t and Kembla $400/t.
Feed barley continued to fetch $400/t in Port Adelaide, while trading $367/t Portland and $342/t FIS Kwinana. Canola continues to trade at $1,000/t + oil premiums in many places.
There is generally demand for most grades in most locations as buyers try to maximize supply chains and move grain as quickly as possible.