GRAIN prices have enjoyed a mini-revival in the past week and a half as production concerns continue to impact in Europe and the former Soviet nations.
Viterra’s cash price on Tuesday was $302 a tonne port in Victoria, compared to $290/t on Friday, August 20.
Chicago Board of Trade December 10 futures have smashed back through the US700 cents a bushel, sitting at US731c/bu on Tuesday evening.
It comes as a minor shock to some within the industry. Many analysts late in August pointed to US Department of Agriculture (USDA) data that showed still healthy world wheat stocks to point to a natural hand-brake in terms of further price gains and a likely gradual dip from the early August highs.
However, this has not been the case and prices have been solid, to slightly higher.
The Commonwealth Bank’s Luke Matthews reported that the upsurge had been caused by a combination of continued concern about Russia’s position, and reported US sales of close to 400,000 tonnes of wheat to Egypt and another undisclosed buyer.
Russia returned to the headlines following comments by Russian Prime Minister Vladimir Putin, who said the Russian grain export ban should stay in place until late 2011, rather than the current deadline of December 2010,
Meanwhile, AWB has raised its forecast wheat pool returns for the 2010/11 season for the third month in succession, this time by $9-22 a tonne.
AWB’s estimated pool return (EPR) for benchmark grade APW wheat in the Western Pool is now $353 a tonne, up $14, and APW wheat in the Eastern Pool is up $12, to a new EPR of $345 a tonne.
AWB’s general manager of commodities, Mitch Morison said there were two implications of benefit to Australian growers from the plight of northern Europe and former Soviet states.
Russia, Kazakhstan and Ukraine are responsible for bulk wheat exports, often of lower quality. Their drought means a tightening of overall wheat stocks as a whole.
However, weather damage in northern Europe has reduced the supply of higher quality milling wheat in that region, further tightening again supplies of quality wheat.
This has application for Australian producers of high protein or niche use grain.
“The shortage in quality grain in northern Europe means there is very strong interest for Australian wheat to supply higher quality needs,” Mr Morison said.
Meanwhile, he said harvest has begun in Queensland, and said Australia was looking good in terms of its production, especially down the east coast.
“Production prospects in the rest of the wheatbelt from Queensland right around to South Australia have just received a boost from recent rains.
“Notwithstanding the unfortunate people suffering from localised flooding in some areas, it’s a great start to the spring growth period and the timing couldn’t have been much better from the market’s perspective.”
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