New seasons grain prices moved sharply higher last on a further deterioration in the outlook for next season’s wheat and barley harvest.
Benchmark ASX wheat futures rallied $22.50 dollars a tonne or six pct to $348.50 a tonne. ASX wheat futures specify that the wheat can be delivered into any east coast port which is likely to mean Victorian ports in the 2018 season given the grim production outlook for Queensland and New South Wales.
The rally in the ASW wheat futures corresponds with a $20 hike in the new crop Melbourne APW bids in the past week to $340.
Sharp increases in the east coast 2018 grain prices are directly linked to the deteriorating production outlook for the upcoming harvest. Drought conditions through much of Southern Queensland and northern New South Wales have prevented many farmers from seeding wheat and barley crops which is expected to severely restrict the size of 2018 northern grain harvest.
Pockets are dry weather in Australia are not unusual. However, the widespread nature of the current drought is far more widespread than most can recall. Farmers in normally safe production areas are reporting they have been unable to seed winter crops for the first time in decades.
Growing concerns the production outlook for grain crops in southern New South Wales appears to have been the catalyst for last week’s hike in the new crop grain prices as the northern crop woes gravitate southwards. Ongoing dry weather through across eastern and Australia and, more recently, a succession of heavy frosts have market a significant deterioration in crop conditions through southern New South Wales during July.
The poor outlook for the 2018 eastern Australian grain harvest has been compounded by last year’s drought shrunken northern grain harvest and the limited amount of carry over grain supplies.
In the past months northern prices have rallied to levels high enough to ship large volumes to Brisbane to relieve the acutely tight grain supplies.
Rocketing southern grain prices flags that further increases in the new crop northern prices are on the cards.
New season’s wheat and barley prices into the Darling Downs rallied to reflect last week’s hike in prices. New season’s stockfeed wheat into the rallied by around $20 a tonne to $400 delivered into the Darling Downs. Similar increases were seen in the new crop barley prices. Last week’s rally brings the new crop prices in line with the current old crop markets.
Global wheat markets moved sharply higher last week as investors become more concerned about shrinking export supplies in Europe, the Black Sea and Australia.
The USDA slashed its forecasts for world wheat output as little as two weeks ago, but further reductions are on the cards. Grain harvesting through Europe and the Black Sea is rapidly advancing, and yields are coming in below earlier expectations which has traders and officials lowering crop estimates.