With all the talk of tariffs and trade disruptions, grain prices have remained remarkably steady. Canola has been volatile, but it has been like a yo-yo for six months or more. Now that we are well and truly in the post-harvest period, we’ll take another look at pricing.
Around a month ago, we looked at the spread between conventional and GM canola, as it was about as wide as it has ever been. True to form, since then, things have changed a little, at least in international markets.
ICE Canola futures, which are based in Canada and are based on GM canola prices, have seen a significant rally since the US tariffs call on Canadian imports were put off for 30 days. Figure 1, shows that despite the rally in ICE futures, local GM canola prices are bouncing along at the bottom of the range we’ve seen since the middle of 2024.
It’s hard to know why local canola is at such a large discount to its Canadian cousin, but there is hope for some upside if export demand materialises.
Conventional canola seems to be similarly afflicted by weak local demand. At close to a $100/tonne discount to Matif rapeseed, canola is relatively cheap. The spread has been as close as $50 per tonne during the recent harvest.
Since CME Soft Red Wheat (SRW) caught up with local wheat prices, our values have joined in the rally. Figure 2 shows a $20/t improvement in both SRW and ASX wheat futures over the past month. In fact, both SRW and ASX wheat futures are at six-month highs.
Wheat price increases are nothing to get too excited about, with local prices seeing not much of an improvement on storage and finance costs.
Barley prices in WA have rallied strongly since harvest (Figure 3) and have gained around $20 since harvest on the east coast. Again, not much to get the seller excited about, but prices are moving in the right direction.
What does it mean?
International wheat markets are treading water in a calm-before-the-storm manner. When spring hits the Northern Hemisphere, issues start, volatility increases and price premiums build in. Alternatively, everything goes to plan, and prices ease. With local canola spreads at the bottom end of the range, it’s not a great time to sell.
Key Points
- Local canola prices are weak compared to international futures, making it a not ideal time for selling.
- Cereal prices have seen some appreciation since harvest, but nothing to get excited about.
- The coming month will likely see more volatility in wheat and barley markets.
Click on figure to expand
Click on figure to expand
Click on figure to expand
Data sources: Mecardo, Bloomberg
