AdamMeyer_125638758_CanolaSaltLakeHarvest-scaled

If you’re reading this, you’re interested in grain prices, and as such, you’ll likely have seen the weather forecast for the coming week. With rain forecast to fall all up and down the East Coast cropping zone, harvest is likely to pull up. What will this do to prices?

Harvest grain pricing is inherently volatile, with prices being forced up and down by supply, grower selling intentions, international market movements, the exchange rate, and even shipping rates. When a big rain is forecast, grain quality can also come into question.

Harvest has been moving quickly this year. Last week Graincorp received 1.6mmt tonnes, taking the total to 3.9mmt. Close to one million tonnes was delivered in NSW, which was twice as much as the week before.

The coming week is likely to see grain deliveries slow to a crawl. Selling ‘off the header’ will also likely stop. There will be some selling of grain warehoused in the last few weeks, as growers jump off headers and onto computers. Storage conditions are pretty generous at the moment, so it might take a price lift to see too much volume change hands this week.

With boats ready to load, does this mean we could see a price lift? Historically widespread, and long-lasting rain events have seen the spectre of quality downgrades lift milling wheat and malt barley prices, while feed values have remained steady or eased.

We likely see a similar sort of reaction during this event, especially as basis has eased with harvest pressure over the last month. Figure 1 shows we have already seen some basis improvement in ASX Wheat Futures. While CME Soft Red Wheat Futures have fallen in our terms, assisted by a stronger Aussie dollar in the last week, ASX Wheat Futures have held steady.

The premium of ASX Wheat has grown by $20 in the last week, so we are already seeing an impact. Unfortunately for growers, all of the basis improvement has come from falling SRW, not rising prices here.

Canola (Figure 2) has also seen some basis improvement. After the fall from near parity to negative 100, a $10 improvement seems minor, but there might be more to come. Exporters will be keen to secure canola which has been warehoused, and this could see prices rally a bit more significantly.

What does it mean?

Keeping an eye on basis gives a good idea of what a ‘fair’ price might be. Growers with grain in store would do well to monitor price and basis this week, and look for opportunities to grab some better than harvest pricing. There is a good chance prices will revert once harvest gets rolling again.

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Key Points

  • Widespread rain is forecast over much of the East Coast over the coming week.
  • With harvest slowing to a crawl, there is potential for upside in prices.
  • Growers with grain in store should monitor prices and basis for selling opportunities.

Click on figure to expand

Click on figure to expand

Data sources: CME, ASX, MATIF, Refinitiv, Mecardo

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