Global wheat prices on the up


GLOBAL wheat prices may have hit the bottom and could be on the way up, after a recent global report confirmed a switch to more lucrative crops in some export regions.

Global wheat values have been at decade lows after five consecutive record production years and soaring global stocks, but has resulted in many farmers switching to other crops.

A key United States Department of Agriculture report released last week estimated US wheat production would plummet 21 per cent this season or 13.3 million tonnes in response to low wheat prices.

Old crop Australian Premium White wheat at Victorian ports is worth about $230 a tonne, while US prices have been lower because of a stronger currency and poor export demand.

The USDA’s World Agricultural Supply and Demand Estimates report also forecast both major exporters, Canada and Russia, would produce less wheat.

Last month Statistics Canada predicted its growers had planted about 10 per cent more canola than last year, to a potential record high of 9 million ha, mostly at the expense of barley and wheat.

The USDA tipped global wheat production for 2017-18 to be down slightly to 737.8 million tonnes halting a five year run of continued record crops.

However if the USDA’s wheat production figure is reached it will still be the second highest total on record.

There has been a small upwards revision to global wheat stocks by the USDA, to 258.3 million tonnes.

While global corn stocks dropped 29 million tonnes, mostly as a result of China shrinking its stockpile.

Commonwealth Bank analyst Tobin Gorey said the production estimates from the dominant exporting countries such as the US, Canada, the Black Sea region and Australia, were key because this determined how much would be on the global market.

“Wheat and corn has lost acres to oilseeds, soybeans or canola,” Mr Gorey said.

As a result he believed there would be “some relief ahead” for wheat and barley growers who have been suffering through poor prices.

“We are expecting the USDA to cut grain (wheat and corn) numbers this year in area planted, production and inventory,” he said.

“This makes us more confident that prices have probably seen their lows for both corn and wheat.”


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