GRAIN markets, in particular wheat, have spiked markedly in the past week in both old and new crop categories.
On the international front, the surprise downturn in the condition of the US and Canadian spring wheat crops has led to frenzied activity on North American futures exchanges.
The Minneapolis wheat futures contract, a key product for spring wheat prices, is now at its highest levels since late 2014.
While the concerns are primarily around spring wheat, winter wheat values have also been dragged up.
Both the Kansas City and Chicago futures contracts are now at their highest levels in over a year.
Further rises could be on offer in the short-term according to analysts who suggest there is little rain on the horizon in dry parts of the US spring wheat belt and across into the Canadian prairies.
Domestically, there has also been a sharp run-up in old crop values, driven by strong demand from livestock feeders in northern Australia.
“Old crop values have picked up around 20 per cent in the past two months,” said Lloyd George, AgScientia.
“It’s been a sustained rally.”
He said although there were solid carryover stocks, unprecedented export demand, combined with a voracious feeder cattle sector looking to take advantage of high prices in that industry, were ripping through the grain.
“Southern Queensland prices have been leading the way, and they have dragged values up in other areas as well,” he said.
Mr George said the combination of strong demand and a poor summer crop had contributed to the price rise.
“We knew we had a massive winter crop to move, but the summer feed grain crop was so much smaller than expected and then you have had this really strong domestic demand, combined with the monstrous export program.
“The carryover stocks are still comfortable but they are now being viewed differently.
“We will have carryover this year, but now with the prospects of a below par new crop, people are happier to carry over some stocks, it is no longer a case of ‘how are we going to move this grain’,” he said.
Internationally, Mr George said the market had been taken aback by just how quick analysts have written off spring wheat prospects in the US and Canada, both nations with good crop report data.
“It has been a surprise just how quickly the spring wheat has fallen away.”
While there is scepticism about whether world wheat futures will hold at current levels due to large stockpiles of grain, the good news for growers is that the gains are unlikely to evaporate entirely.
Malcolm Bartholomaeus, Callum Downs, said historically it was rare for markets to give up gains made at this late stage of the northern hemisphere season.
Feed wheat prices, delivered into the Darling Downs are currently in the range of $285 a tonne.
ASX new crop January futures hit their yearly high today (Wednesday), reaching $277/t.