GRAIN markets have continued to rise on the back of news out of the world's largest wheat exporter and the world's largest grain importer.
Investors have pushed wheat values up after Russia announced it would double its wheat export tax to around $A78 a tonne from the start of March.
The Russian government has implemented this measure to stop domestic food prices rising.
There are also reports there will be a formula-based tax on exports as well with higher prices attracting higher taxes.
On the wheat export front it will mean there are fewer options for buyers in the Middle East and Indian Ocean regions.
"Given the tax will reduce Russian sales and that there does not seem to be a lot of European grain about, a lot of the demand will be met by the US and Australia," said Tobin Gorey, Commonwealth Bank commodity analyst.
"The US will do more in west and possible even north Africa, while Australian wheat will be attractive for buyers in the Indian Ocean region," Mr Gorey said.
Chicago Board of Trade (CBOT) wheat futures rose to six year highs on the back of the Russian news before prices plateaued after the week before corn values hit seven year highs.
Malcolm Bartholomaeus, Bartholomaeus Consulting, said the other major influence on world grain prices was Chinese demand.
After China's massive shopping spree last week, culminating in purchases of 2.1 million tonnes of corn in a single day, analysts are looking for leads in regards to Chinese stocks.
"China is buying more than it usually does at this time of year and the market is watching their buys to see what is happening, the USDA (US Department of Agriculture) has a report out this week and that may make changes to China's stocks and its demand."
While Australia is not selling barley to China due to the tariffs imposed it is directly benefiting in the wheat space.
S&P Global Platts reported that Australia sent over 800,000 tonnes of wheat to China in December, a record amount of wheat sold to any country for a single month, as part of total Aussie wheat exports of 2.5 million tonnes.
Mr Bartholomaeus said the competitive pricing of Australian wheat at the time was a key factor in the sales.
Mr Gorey said the market would be looking for information regarding Chinese demand into the future in the USDA report.
"The market is trading in an early hiatus with not much happening before the USDA updates its forecasts on Wednesday night," he said.
"February updates are usually dull affairs - but not this season, the USDA may alter their estimates of China's supply and demand for feed grain to be more consistent with that nations heavy feed buying."
He said private firms did not think China's demand would dry up any time soon.
"Cargill's chief executive said last week they did not think China's hefty purchases of feed were finished yet," Mr Gorey said.
Mr Bartholomaeus said he was also watching other changes to the Russian market.
"There are also export volume quotas, which have been a little lost with all the focus on the tax, that is likely to continue into the back end of the year so it might influence the amount of Russian grain that is exported," he said.
Gregor Heard
Gregor Heard is ACM's national grains industry reporter, based in Horsham, Victoria. He has a wealth of knowledge surrounding the cropping sector through his 15 years in the role. Prior to that he was with the Fairfax network as a reporter with Stock & Land. Some of the major issues he has reported on during his time with the company include the deregulation of the export wheat market, the introduction of genetically modified crops and the fight to protect growers better from grain trader insolvencies. Still involved with the family farm he is passionate about rural Australia and its people and hopes to use his role to act as an advocate for those involved in the grain sector.
Gregor Heard is ACM's national grains industry reporter, based in Horsham, Victoria. He has a wealth of knowledge surrounding the cropping sector through his 15 years in the role. Prior to that he was with the Fairfax network as a reporter with Stock & Land. Some of the major issues he has reported on during his time with the company include the deregulation of the export wheat market, the introduction of genetically modified crops and the fight to protect growers better from grain trader insolvencies. Still involved with the family farm he is passionate about rural Australia and its people and hopes to use his role to act as an advocate for those involved in the grain sector.
