SURGING corn prices globally have helped lift wheat values up in their slipstream.
And, in spite of Australia having some of the cheapest wheat in the world, the big global rises, spurred by declining stocks and concerns about the South American corn crop, the gains mean farmers are faced with new crop wheat prices above $325 a tonne delivered port.
This can translate to a farmgate price in excess of $300/t in some cases, which is at right near the peak of price levels for non-drought years in Australia.
And market advisors have suggested it was worth growers taking a look at the current values and potentially locking in a small percentage of their expected 2021-22 crop.
"We'd suggest it would be prudent to have a look at pricing at least a small percentage of your new crop," said Market Check head of strategy Nick Crundall.
"Given world fundamentals there is still the chance for further price rises if things do go wrong during the northern hemisphere summer, but based on the costs of production here if the lowest price parcel you were selling was around $315/t port then you'd be doing pretty well," Mr Crundall said.
"We see it as a great way to take some risk off the table, it wouldn't be a big portion of the crop, say 10 per cent of your minimum production estimates, but especially for those with a bit of moisture in the profile and some confidence about the year ahead its worth a look."
He said he was advising clients to participate via a hedging strategy, mainly focusing using international markets, rather than straight forward physical contracts with their associated production risk.
Nick Carracher, chief executive with Lachstock Consulting, said corn was leading the charge in terms of international price gains.
"Corn really is the catalyst for the broad based strength we are seeing, we've seen the massive Chinese purchases, where they bought seven million tonnes in a week and the market is wary of that," Mr Carracher said.
"The actual crops in the ground don't look that bad at present but the balance sheet is relatively tight and you have to price some risk premium into the market," he said.
Mr Carracher said much of the world's wheat crops actually were in reasonable condition.
"There is some dryness in parts of the US wheat belt, but it is not disastrous and other parts of the world look good, Russia, in fact, looks spectacular," he said.
Mr Crundall agreed.
"The Brazilian safrinha (secondary) corn crop is in strife and looking at the rainfall records there is probably only about a one in twelve chance of it receiving the rain it needs as we head into their dry season but for wheat it is quite good, the Black Sea looks like it will bounce back and even the EU is catching up."
He said Australian wheat exporters would have a range of potential buyers for their product at current pricing levels.
"We're a very cheap exporter of grain in the world market at present and that may see Aussie wheat heading to destinations it hasn't gone for some time."
He said wheat was replacing corn in feed rations in parts of the world due to the inverse in price with corn values sky-rocketing. Corn is normally cheaper than wheat.
"There are good prices on offer for farmers but it is not because of a local drought-based premium raising basis levels which is good for the industry."
Mr Carracher said things looked good for the export wheat sector but said export logistics continued to pose problems.
"Issues with ship and container availability are a problem to keep monitoring, you have to look at the potential for delays," he said.