Header harvesting grain

Harvest is either going or rapidly approaching in many cropping zones at the moment. With harvest comes selling, or at least much greater interest in prices. Harvest pressure is already appearing in markets, with prices beginning to ease.

Even during a relatively dry year harvest pressure can impact markets. In some cases, harvest pressure is stronger in dry years, as growers are reluctant to forward sell, given the uncertainty in production.

This year it is likely even worse, with geopolitical issues creating another layer of uncertainty, and producers not wanting to get caught having sold cheaply in a rising market.

There is always some impetus to sell off the header, with bills racked up during the growing season needing to be paid, but this year with livestock prices where they are, there might be additional need to generate cash for mixed farmers.

With harvest only just underway, we are already seeing some impact on price. Figure 1 shows canola prices at Geelong, on the MATIF exchange and the ‘basis’ or difference between the two. The last fortnight has seen MATIF prices bouncing around, but Geelong canola has fallen and stayed there.

Geelong canola basis to MATIF has rapidly gone from -$30 to -$80 over the last week, with grower interest in selling increasing, with prices below $600 port fairly recent in memories.

The story is similar in the wheat market. Figure 2 shows Chicago SRW and ASX Wheat Futures. ASX values have eased back towards $400/t, despite SRW staging a rally over the last fortnight. SRW has gained over 10% in our terms from the low, but ASX has shown none of that strength.

Figure 3 shows the impact on basis, losing $40, from over $100/t back to $60 as wheat supplies gain certainty and selling picks up. Growers will be looking at $400/t and think it looks pretty good in the current environment. It is still only $30 off the highest price seen since last November.

What does it mean?

We’re unlikely to see local prices rise relative to international values now, in the absence of a harvest-disrupting rain or a similar event. There is still room for basis to squeeze further, but both wheat and canola are likely to see some resistance to selling at $400 and $600 respectively.

Having said that it will be some time before basis has the chance to improve, with price increases reliant on international markets now.

Have any questions or comments?

We love to hear from you!

Print This Post

Key Points

  • Both wheat and canola prices have fallen relative to international values recently.
  • With more certainty surrounding supply, selling appears to be picking up.
  • There is little short-term basis upside, with higher prices reliant on international markets.

Click on figure to expand

Click on figure to expand

Click on figure to expand

Data sources: MATIF,Refinitiv, CME, Mecardo

Make decisions with confidence- ask about our board packs, bespoke forecasting and risk management services

Have any questions or comments?

We love to hear from you!
Grains & Oilseeds

Jack tours Russia

To start the week, the wheat market got a very nice little push courtesy of Russian frosts, a bullish USDA report and technical short covering.

Read More »
Wheat plants _ image
Grains & Oilseeds

Benign May WASDE

It’s May and the new season World Agricultural Supply and Demand Estimates (WASDE) from the United States Department of Agriculture (USDA) is out. The WASDE

Read More »

Want market insights delivered straight to your inbox?

Sign up to the mailing list to get regular updates to new analysis and market outlooks

Independent analysis and outlook for wool, livestock and grain markets delivered to you as it’s published

Commodity conversations podcast cover image, a illustration of a sheep standing on a cow's back with grain either side
Listen to the podcast

Join the Mecardo team for the Commodity Conversations podcast, where we provide short weekly market recaps and longer conversations with guests to discuss the drivers and trends in livestock, grain and fibre markets.

Photo of a farmer surrounded by Merino sheep in dusty yards
Research: Analysis of the Australian sheep flock

In this report for LiveCorp and MLA, we analysed the historical trends in the demographics of the Australian sheep flock, examining domestic factors that influence farm-level enterprise decision making. 

Image of harvested grain pouring into a chaser bin

We don’t just bring you the most up to date market insights. Find out more about Mecardo’s services including risk management advisory, modelling, benchmarking, research & consultancy.