It’s the last grain analysis article for the year, so we’ll provide a short harvest update, and take a look at the crystal ball to see how things might pan out in 2025.
We are halfway through December and harvest appears to be winding down. WA has produced a massive crop, while the
east coast crop might just eclipse 2022-23, judging by Graincorp receivals.
Figure 1 shows the WA CBH receivals dwarfing all states except NSW. With nearly 18mmt delivered to the week
ending December 9, CBH says they are on track to record their third-largest
year on record.
On the east coast Victoria and SA have gone past 2 million tonnes each,
but it looks like it will be hard to see them reaching 3 million. NSW appears to be all but finished but could
creep towards 7 million tonnes over the next week.
Figure 2 shows that Graincorp receivals have easily accounted for 2023-24
and are only 78,000 tonnes from beating the 2022-23 level. This is largely due
to the good season in NSW.
Wheat prices have continued to bounce along in a familiar range, while
canola has somewhat steadied after plenty of volatility over harvest. Figure 3 shows a rather benign picture for
both international and local wheat markets since September.
Looking forward there should be plenty of volatility to come in the new
year. As outlined in Friday’s market
comment, supplies are tightening, and there are questions over the Russian 2025
crop. With demand for wheat ever-growing, a significant downward shift in
supply, in an already tight market, would see a sharp rally.
The first quarter of the year is historically the ‘hedging window’ for
wheat, especially through late February, March and April. This is when winter wheat crops come out of
the thaw, and corn and soybean crops are planted. If you’re going to hold onto wheat this year,
the payoff could be significant, if things go right … or wrong, depending on your perspective.
What does it mean?
There are a few signs pointing towards wheat prices being at the bottom of the cycle, but the upside could be months away. Canola prices are strong, and it is subject to all sorts of geopolitical influences, as we’ve seen lately.
Key Points
- WA harvest receivals have been strong, and harvest is slowing on the east coast.
- East Coast receivals have been relatively strong, thanks to NSW.
- There are some fundamental factors pointing towards higher wheat prices in 2025.
Click on figure to expand
Click on figure to expand
Click on figure to expand
Data sources: Graincorp, CBH, Viterra, CME, ASX, Bloomberg, Mecardo
