Grower bids remain well below global values

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.

However, 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) and Russian 11.5 DMB as an example is US$39/t or AU$54/t.

So growers should be asking, is there more value in the market available to me when selling?

The answer over the past week has been yes with trades on Clear Grain Exchange (CGX) regularly $10-15/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. Maybe 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 you may expect the demand to improve at some point.

Australian wheat and barley is the most competitively priced grain into global markets by a large margin, which may mean there is better value to be created by offering it at the price you want to all buyers.

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.

There are plenty of buyers who want to buy Australian grain. Many buyers are searching for grain on offer on CGX.

If many growers sell a lot of grain quickly, it may push values lower. A slower selling pace from Australian growers will help to underpin prices to help it line-up with grain moving off-shore.

Australian growers should know that your behaviour can have a large impact on prices you receive, particularly when the world needs Australian grain, and Australian grain is well priced into world markets!

Grain is consistently selling at better values on CGX than published bids. Make sure you have your grain on offer on CGX at the price you want so all buyers can see it and try to buy it.

Let’s ensure you’re receiving your grain’s full value.

View recent trades on the exchange or call 1800 000 410.