Domestic grain prices fall as farmers offload old crop supplies

Improved weather, sharp declines in international futures markets, and end of financial year have all contributed to the surge in farmer selling in recent weeks.

Increased farmer selling has taken the pressure off the domestic markets, which struggled to maintain grain supplies in April and May. Drier weather in June has finally allowed farmers access grain stored on farm.

Stockfeed wheat, barley and sorghum bids into the Darling Downs slipped by a further $15-25 a tonne. Barley slipped by a further $20 to $440 delivered into Downs feedlots. Sorghum bids fell a further $20 to $365 delivered Downs.

Feeders are also cautious about how much old crop grain they secure as they eye off even cheaper new crop supplies in October. Most farmers have been reluctant sellers of new crop grain after a protracted planting and unsure on how the season will finish.

New season grain prices have also fallen sharply in recent weeks. ASX wheat futures for a January delivery is currently $426/t. This is down 16 per cent, more than $70/t from the highs of $500 set back in mid-May. However, these declines are modest to Chicago Board of Trade wheat futures which have plunged 33pc at the same time.

Another week of sharp declines in overseas markets also pressured domestic prices. United States wheat futures tumbled by more than 20pc in the past four weeks on harvest pressure on the prospects of larger Russian exports.

Grain supplies are more readily available with the onset of the northern hemisphere wheat harvest underway. The US winter wheat harvest is approaching its halfway point while cutting in Europe remains in its early stages.

Russia's 2022 wheat harvest is expected to be a record large 88.8 million tonnes, according to the European Union's crop monitoring service. Favourable planting conditions, negligible frost kill damage during winter, and adequate rainfall in spring will result in strong yields, it said.

US wheat futures came under further pressure late last week after Russia announced changes to its grain export tax arrangements. The changes result in a sharp fall in the level of tax Russian exporters must pay.