THE Australia grain market's eyes will be on key cropping regions over the next six weeks to see how high basis levels push.
At present commodity analyst Malcolm Bartholomaeus said basis, or the difference between Australian and international grain prices was around $80 a tonne lower than it was at this time last year, reflecting a potentially better crop, but he said this was not set in stone.
"I have spoken to an agronomist who feels the national crop is declining by around 5 per cent a week as a result of the dry conditions and frosts and he feels this will continue unless there is a decent rain," Mr Bartholomaeus said.
"At present the general feeling is that the eastern crop, including South Australia is a lot better than at this stage last year and that will mean more grain will flow to northern NSW and southern Queensland from southern NSW, Victoria and South Australia, but that is far from in the bag yet, there are a lot of places that could use a rain quite badly.
"You would not expect grain prices to run up quite as high as they did last year at this stage, but we'll certainly keep an eye on it."
Andrew Whitelaw, analyst with Mecado, said he thought grain prices would have a cap on them.
"You look at international values, plus say $100/t in freight costs and $40/t in administration costs to bring it in so I don't think prices can rise up too far beyond that now there is the precedent of imported wheat coming in."
"The market is also much more comfortable with bringing in grain from Western Australia and South Australia, whereas last year there may have been a little bit of panic buying when people were not sure where the grain was going to come from.
"At this stage I would predict there will be enough grain in the east and South Australia to mean not as much is needed to come across so you wouldn't expect prices to get up quite as high."
"Even allowing for a poor finish I don't think we're going to need anywhere near as much WA grain."
Mr Whitelaw said he expected demand to remain relatively settled in coming months.
"There may be a few graziers who won't feed sheep for a second consecutive summer, but there is also a lot of inelastic demand from the cattle on feed, pig and chicken sectors."
"The pig industry is interesting, it may not have been able to afford another round of high prices but African Swine Fever and the grain price slipping back a bit means they are still in the market."
Meanwhile, internationally a US Department of Agriculture (USDA) World Agricultural Supply and Demand Estimates (WASDE) report was far more pedestrian than recent editions, which sparked major drops on grain futures exchanges.
This time the WASDE report went mainly to script, with neutral news on corn, with lower yields in the US tempered by lower export data and a similar story in the wheat market.