US Wheat and Corn futures were off heavily on Friday night.
Soybeans held its head above water finishing up AUD 5pmt.
The ASX Jan wheat contract is about as much loved as a drunk uncle at the Christmas lunch, falling below $400 pmt.
The last time it was under $400 was way back in September, when the Cats were considered too old to win the flag.
But today, bids will drop, based on harvest cranking up due to some warm weather. Unless of course all the growers in Australia decided not to sell and either warehoused their grain or set their price at parity; that would shake the market up. Hang on, growers can’t hold the market to ransom and control their prices; that’s the role of the exporter.
The SA Government Crop Forecasting group (PIRSA) have called the SA wheat crop almost 7 million tonnes which is up from 4.7 million MT last year.
The Barley crop is forecast just under 2.9 million tonnes compared to 2.2 million mt last year. Based on these forecasts, SA has 3 million more tonnes of wheat and barley they will need to put in boats. SA has an export capacity at 8.5 million tonnes, so this will be under some pressure.
If we compare current prices in each state, SA is trading at a discount to Vic. Last year they traded at a premium due to the ability to export more grain and they drew tonnes from the Northern Mallee and western Wimmera regions
Currently APW is around $400 Track SA versus Vic APW $415 Track. Barley is around $300 Track SA versus $315 Track Vic.
In a “normal” season, Vic markets would trade around a $20 premium to Adelaide markets due to domestic demand. But that was back in the days when the domestic market had to pay over export parity to stop everything leaving in boats. Oh, the good old days.