Those strong global wheat prices have not translated to domestic prices, however, as both milling wheat (APW, Port Adelaide) and feed wheat (ASW, Port Adelaide) remain around 5 per cent below levels seen in 2019 and 2018.
Despite this, Australian grains producers are looking at a strong year, based on production levels. The latest crop report from the Australian Bureau of Agricultural and Resource Economics and Sciences (ABARES) reveals a strong harvest ahead, with wheat production forecast to increase by 91 per cent to 28.9 million tonnes, barley production by 25 per cent to 11.2 million tonnes and canola production by 47 per cent to 3.4 million tonnes.
Similarly, global coarse grain production is expected to reach new record levels, increasing almost 6 per cent in the last year, most of which comes through the increase in corn production in the United States and Brazil. A record global corn harvest, combined with relatively stable global barley crop, would normally see some downward pressure on overall coarse grain prices. This year, however, this is yet to eventuate, with strong bidding for corn in the US based on concerns over the impact of recent storms and weather on the corn harvest also supporting global barley prices.
Australian concerns over the impact of increased tariffs on Australian barley exports to China do not seem to have eventuated, as global trade flows shift to accommodate the almost immediate cessation of Australian barley exports to China. In its stead, the Saudi Arabian market appears to be opening up to Australian exports, as Black Sea exports are diverted to China.
Global oilseed prices have seen the strongest rises in recent weeks, as demand from China and slower processing in Argentina put pressure on supply. However, those increasing global prices, similarly to wheat prices, have not translated to large increases in the domestic price which, while not going sky high, still sit at stronger levels than either wheat or barley at just 1 per cent below the levels seen at the same time last year. In the medium term, ABARES is forecasting a solid drop in canola prices, which does not seem to be materialising as yet.
Mark Bennett is Head of Australian Agribusiness and Madeleine Swan is Associate Director, Agri Research Australia at ANZ
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