IN SPITE of a rally in early March, Australian grain prices have slipped significantly since harvest, with values for cereal grains across the east and west coasts dropping up to $80 a tonne since November.
It has had some industry analysts on the east coast scratching their heads, with cattle on feed numbers remaining above one million head for the fourth consecutive quarter and the upcoming winter crop prospects already below average in Qld and northern NSW.
Subdued international values, on the back of improving northern hemisphere crop prospects, are seen as the key driver of the fall, with sufficient grain available in WA to keep Australian prices in some way correlated to the international market.
This week, cash prices had monster single day spikes of $10/t on the east coast and up to $13/t for Australian Premium White wheat in the Adelaide port zone.
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Industry speculation is that these spikes are the result of a buyer concerned about supply and wanting to get parcels of grain quickly.
Adelaide APW prices are presently at $365/t and Port Kembla, NSW, values sit at $408/t.
"There is a feeling the trade had an extremely long position, especially in regards to the South Australian crop, where it was paying prices about $US40 a tonne above that paid in WA," Ag Scientia's Lloyd George said.
"The unwinding of these positions has had a part in the drop in prices through the start of the year."
He said the market was hard to predict.
"It's certainly not a situation we see very often," Mr George said. "There is grain about, both in WA and even on the east coast, there was a general consensus there was a little more than expected, all of which has kept a lid on things.
"On the other hand, the summer crop has not amounted to much, there has been poor northern summer rain and the moisture levels are so low in the northern zone that there are already concerns about the upcoming winter crop."
Internationally, prices have been in free-fall for several weeks with United States futures exchanges continuing to shed value despite a neutral outlook at present.