IN SPITE of a fall in global wheat prices there are still concerns surrounding world production this year, with key northern hemisphere regions impacted by drought, along with the disruptions as a result of the Ukraine conflict.
The most recent analysis from the European Commission indicates the current crop will be below the five year average in soft wheat, durum wheat and winter barley crops.
Hotter than average conditions have knocked around yields, particularly in southern and western Europe.
Spain and France have fared the worst from the heatwave and rainfall deficit and are expected to be well below average.
On the other side of the continent cold weather in the Baltic States is also having a negative impact.
Russia remains a key focus for the market with wildly varying forecasts.
Official Russian estimate for wheat production sit at a record 89.2 million tonnes but the US Department of Agriculture number comes in a whopping 14m tonnes lower at 75.2m tonnes.
The ANZ bank believes global grain stocks could decline further, keeping prices at historic highs.
In the latest ANZ Agri Commodity Report ANZ associate director of agribusiness research Madeleine Swan said there was more to the current high prices than simply the fall-out from the conflict in Ukraine.
"While the conflict in Ukraine has had a major impact on grain prices, it is the overall global stocks to use ratio which is increasingly of concern," Ms Swan said.
"This is being driven not only by the Russian war in Ukraine limiting wheat supplies, but also the prospect of lower production in 2022/23 and the flow-on effects of other policies such as the Indian export ban, further limiting supplies," she said.
Wheat prices have come off by around $180 a tonne in Aussie dollar terms on US futures exchanges over the past three weeks as harvest pressure comes into the market.
However there is still a lot of volatility in both directions in day to day trade as concerns about ongoing supplies fail to disappear.
Ms Swan said supplies were genuinely tight, especially once Chinese stocks, not available to the broader market, were taken out of the equation.
She said without Chinese reserves the world had enough wheat for around two and a half months.
It is a slightly better tale in other grain commodities, with stocks improving in barley, oilseeds and corn, albeit off historic low levels.
The current pricing lull has been significant enough to see some buyers locking in prices.
Egypt's state buyer GASC has booked its largest wheat tender in over a decade in a bid to bolster supplies in the North African nation.
Egypt is traditionally primarily supplied by Russia and Ukraine but in this tender most of the wheat will be supplied out of France.
Overall Egypt has purchased 815,000 tonnes in the tender.
Locally, although the focus has been on high prices in the wheat and oilseeds space, Rural Bank is also highlighting a strong outlook for pulses.
In its recent rural commodities report Rural Bank said lentils, set to push to the $1000 a tonne mark, and faba beans, with their nitrogen fixing properties allowing farmers to cut expensive synthetic nitrogen fertiliser inputs, would both be widely planted this year.