With the feeding sector growing in both beef and lamb industries, along with the traditional large consumers, chicken and pork, there has never been as much grain consumed domestically. As such we have never had such interest in what feed prices are going to do.
Australian domestic grain consumption is reported somewhere on the ABARES or ABS websites, but it’s not easy to find. What is easy to find and navigate is the United States Department of Agriculture (USDA) PSD tool, which spits the data out quickly.
Figure 1 shows the USDA data for Australian domestic wheat and barley feed consumption. The numbers are pretty rough, as indicated by their roundness. The USDA would be guessing how much wheat or barley was consumed in food and beer production, and deducting it from the total, or vice versa.
The peak consumption years are in drought, and we can see that in 2024-25 total feed consumption equalled the peak seen in 2020-21 at 9.5mmt. In 2010-11 feed consumption sat at just 5.5mmt.
The increase in domestic feed consumption has been good news for grain growers. It has seen local grain prices track at higher levels relative to international values, as competition for grain was stronger. No longer was it export or nothing when we had a bumper crop.
Turning to prices, they have continued to bounce along at close to $300/t at port since harvest. Feed barley has narrowed the gap on wheat this year, but given the exportable surplus, both remain closely tied to international feed values.
CME Soft Red Wheat (SRW) Futures are as close to a perfect market prediction as we can get. Futures markets take in all the available information and form a view on price. Figure 3 shows the futures curve for SRW at the current exchange rate. The rise in the curve is the cost of carry.
There is always the risk that local markets will diverge from CME pricing due to drought and weak grain supply. This can see local prices move to a $100 or more premium to SRW. If consumers are concerned about this, they can use ASX futures, or physical contracts.
What does it mean?
The price of feed grain hasn’t really been impacted by the rising Aussie dollar, or dry conditions, due to a slight improvement in SRW, and the fact supply is abundant. International grain price risk is easily managed using futures or options, the local price premium is a little harder, especially given the potential for dry conditions from El Nino.
Key Points
- Feed grain consumption is expected to be at record highs again in 2025-26.
- The price of feed grain remains closely tied to export grain markets.
- International grain prices are easily managed, domestic premiums need to be watched.
Click on figure to expand
Click on figure to expand
Click on figure to expand
Data sources: USDA, Reuters, CME, Mecardo
