THE LAST time Kansas City wheat futures, one of the world's premier pricing instruments for hard wheat, were so low was in 2006.
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To put this in context, this was the year Justin Timberlake was bringing Sexy Back, West Coast was avenging its narrow defeat to Sydney the year before in the AFL grand final and John Howard was in the penultimate year of his time as our Prime Minister.
This week Kansas City hard red winter wheat futures dropped below US400 cents a bushel, sitting at US395c/bu on Wednesday, which even allowing for the Australian dollar sitting at just US71 cents works out in Australian terms as a price of just $204.50 a tonne.
The low comes in spite of the US Department of Agriculture (USDA) estimating a winter wheat plant in the US of just 12.6 million hectares, the lowest in over 100 years.
However, weighing heavily on the market is the fact the US has its highest ending stocks are at their highest levels since the 1980s and US exporters are struggling to find market share across the world.
From an Australian point of view, a market which had been listing in a relative narrow band for the past month has started to drop in line with US values, with new crop values now at their cheapest in over a year.
Commonwealth Bank analyst Tobin Gorey said ASX east coast wheat futures prices fell heavily on Tuesday, with the January 2020 contract falling to $312.
In spite of a lack of supplies for livestock producers, old crop values have also dropped.
The May 2019 contract is down to just $348 a tonne.
Rain across eastern Australia is expected to boost feed supplies, but it will be some time before the feed is available to producers.
Gregor Heard
Gregor Heard is ACM's national grains industry reporter, based in Horsham, Victoria. He has a wealth of knowledge surrounding the cropping sector through his 15 years in the role. Prior to that he was with the Fairfax network as a reporter with Stock & Land. Some of the major issues he has reported on during his time with the company include the deregulation of the export wheat market, the introduction of genetically modified crops and the fight to protect growers better from grain trader insolvencies. Still involved with the family farm he is passionate about rural Australia and its people and hopes to use his role to act as an advocate for those involved in the grain sector.
Gregor Heard is ACM's national grains industry reporter, based in Horsham, Victoria. He has a wealth of knowledge surrounding the cropping sector through his 15 years in the role. Prior to that he was with the Fairfax network as a reporter with Stock & Land. Some of the major issues he has reported on during his time with the company include the deregulation of the export wheat market, the introduction of genetically modified crops and the fight to protect growers better from grain trader insolvencies. Still involved with the family farm he is passionate about rural Australia and its people and hopes to use his role to act as an advocate for those involved in the grain sector.
