The December United States Department of Agriculture monthly report eased concern about supplies for the global wheat market, with a net 2.38 million tonne lift in estimates of global ending stocks.
The increased supply has come from an upward revision in opening stocks, as well as from increased production estimates.
Opening stocks were increased for the EU and Australia, and production estimates were increased for Australia, Russia and Canada, as flagged by official estimates ahead of the USDA report.
Australia is on track for a record crop of course, but the crops in Canada and Russia are well down on last year.
Canada's crop is down 13.53 million tonnes, or 38.5 per cent, and Russia's crop is down 9.85 million tonnes, or 11.5pc on last year.
Globally, wheat production has shown a 1.99 million tonne lift on last year, but consumption is running ahead of production by 11.46 million tonnes, resulting in a drop in global stocks of the same amount.
Compared to the November report, global ending stock estimates have been lifted by 2.38 million tonnes, hence the easing of supply concerns, but not all of the increased output will be milling grade, particularly in the case of the Australian crop.
Heading into the monthly report, wheat futures shed value, dropping US 73.25 cents a bushel (based on daily closing values) from November 24 until Friday, December 10.
That was an 8.56pc decline.
In Australian dollar terms, the decline over the same period was $32.96 a tonne, or 7.57pc.
That pushed the Australian dollar value for nearby futures below $400/t for the first time since November 11.
On the evening of Friday, December 10, a small price recovery pushed us back above the $400/t level.
The Australian cash market has reacted by losing some value.
The South Australian market still leads the national market, with prices dropping down to $409/t delivered port for the start of this week, having peaked at around $441/t port in the Port Adelaide zone, and at $455/t port basis on Eyre Peninsula.
We are coming into the end of the year at quite remarkable price levels for wheat.
For much of harvest prices for milling grade wheats have been above $400/t in all port zones.
They are very strong price levels.
Equally as remarkable is the fact that Chicago Board of Trade futures are at similar levels for next year's crop as they have been/are for the current crop.
That gives all growers the opportunity to capture very high wheat prices for two seasons in a row.
Prices should hold until the global 2022-23 crop is seen as being secure.
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