Article by: Hari Yellina
Last week, demand for Australian grain remained high, with 37 different purchasers buying grain through Clear Grain Exchange and several others looking for grain on the market. The globe is still concerned about how it will obtain grain. This has been the case for some time, with poor crop conditions in the northern hemisphere last season putting Australian grain in the enviable position of being the world’s primary grain supplier. More lately, as the market grapples with the interruption in grain arriving from these big suppliers, the Ukraine/Russian conflict has prolonged those global supply issues into the latter stages of this year.
Furthermore, the global grain markets are presently in the normally turbulent period of the calendar year. Northern hemisphere crops are susceptible to their spring, and everyone is speculating on how much production will be accessible before the end of the year. On the northern hemisphere output projections this year, there are a couple of big-ticket items floating. China is experiencing drought, and the United States is seeing bad crop conditions. All of this is based on the extremely high cost of crop inputs. As a result, the worldwide market is jittery, and understandably so. As a result, Australian grain, which is currently bountiful, is in high demand.
The Chicago Board of Trade is a trade association in Chicago. May wheat hit a high of almost $A530 per tonne during the US overnight session on Monday Australian time, up more than 7% from the previous week. CBOT forward futures (Dec 22 and Mar 23 delivery) have climbed sharply since the beginning of April, trading at similar levels to the spot month, signalling increased supply concern in the northern hemisphere. Previously, the forward months were trading at a discount because the market anticipated that by the end of 2022, there would be more wheat in the world. In some circumstances, price discrepancies across port zones in Australia remain extreme.
This is influenced by highly localised supply and demand criteria such as grade quality, availability, buyer needs, and supply chain capacity versus what is covered. Wheat warehoused in Geraldton and Esperance, for example, continues to trade $30-$40/t above Kwinana WA levels. In SA ports, APW1 was reaching $440/t, while Melbourne was at $412/t and Kembla was at $400/t. Feed barley continued to make $400/t in Port Adelaide, with Portland and FIS Kwinana trading at $367/t and $342/t, respectively. Canola continues to trade at $1000/t in several areas, with oil bonifications. Most grades are in high demand in most regions, as purchasers aim to maximise supply networks and transport grain as soon as feasible.