Australian wheat prices surged higher last week after torrential rain in NSW swamped wheat fields waiting to be harvested.
Wide expanses of NSW cropping areas are under flood waters after cropping areas recorded 75 millimetres to more than 100mm late last week.
Flood levels rose rapidly in the worst affected areas around the Namoi and Lachlan rivers where paddocks were already saturated and dams were full.
Worst case scenarios are being factored in by farmers.
Harvest was advanced in northern NSW but was just starting in the central west and south.
Ahead of the rain, farmers in the central west of the state were reporting record wheat yields and better than expected quality.
They are bracing for disappointment when they eventually get back onto the saturated paddocks.
Wheat crops have gone from golden to grey with some now lying flat on the ground following the torrential storms.
Milling quality wheat prices surged higher on the rain but lower quality wheat values languished.
ASX wheat futures surged $50 higher to $430 a tonne but lower quality values sunk.
Stock feed wheat prices slipped below $300 port levels, more than $100 a tonne discount to the benchmark Australian Premium White.
Traders are saying that less than a third of the NSW wheat crop was harvested ahead of the rain.
Many expect that more than half of the state's wheat harvest will be downgraded to general purpose quality or lower.
It's a huge financial penalty for farmers.
Farmers are hoping that wheat quality holds up and crops are still suitable for milling purposes, hopefully capturing some of the current strong global demand for milling wheat. Time will tell.
The rain has been a logistical headache for grain consumers, further delaying new crop supplies.
The Australian Bureau of Agricultural and Resource Economics and Sciences will release its December Crop Report in the coming week where they are widely expected to raise the national wheat production estimate from the 32.6 million tonnes in September.
Canola and barley estimates are also expected to be lifted.
Attention has now shifted from quantity to quality.
Australia may well harvest a record large wheat crop in the 2021/22 season, but quality is expected to be compromised.
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