03 December 2021, Australia: Demand for wheat in Australia right now appears to be strongest for higher quality milling grades (ie. APW1 or better) given the local price spreads between these grades and lower quality grades.
Despite the general improvement in values for milling wheats over the last month, when we compare the values of APW1 wheat bid to growers in Australia against values of physical wheat from elsewhere in the world, Aussie grower bids are still well under global values.
The price table below shows the price difference at destination (ie. countries we export to) between Western Australian APW1 wheat (based on grower bids), Russian 11.5 DMB as an example is US$39/t or AU$54/t.
Is there more value in the market?
The answer over the past week has been yes, with trades on Clear Grain Exchange (CGX) regularly $10-30/t better than the best published grower bid.
The large discount in price to ASW1 wheat and lower is possibly signalling that buyers are not overly keen to own it right now. Potentially because of the certainty in local supply and the focus being on the more uncertain milling grades.
However Australian off grade wheat, like barley, is very well priced against competing origins of corn as an alternate feed grain so we may expect the demand to improve at some point.
Australian wheat and barley are the most competitively priced grain in global markets by a large margin, which may mean there is more value to be created.
Want to control the selling price of your grain?
There are plenty of buyers who want to buy Australian grain. Many buyers are searching for grain on offer on CGX.
If a lot of growers sell a large volume of grain quickly, it may push values lower. A slower selling pace from Australian growers will help to underpin prices and help it line-up with grain moving offshore.
Grain is consistently selling at better values on CGX compared to published bids, providing growers with an alternative to the norm.
The table shows indicative wheat and barley values based on best published bids to growers this week plus fobbing costs and exchange rate conversion to provide a US$ Free on Board (FOB) price basis ex Western Australia and Eastern Australia and our major competitor origins of Black Sea and US Pacific Northwest.
The table then adds current bulk sea freight rates to the FOB price to provide a comparison of values from those origins delivered to the major importers on a Cost and Freight (CNF) basis.
The CGX team will be on hand over harvest to provide fortnightly grain price commentary as well as updates on grain supply and demand from around the world.