Basis levels between Australian and North American wheat prices have risen to more than $100 a tonne as concerns about Australian supplies send local prices up in comparison to global values.
The benchmark Chicago Board of Trade wheat futures contract has slipped to its lowest levels in three years, before the onset of the Ukraine conflict, dipping down to US541 cents a bushel, a 6 per cent day on day fall.
Mecardo's Angus Brown said this meant the basis level between Australia and the US had hit more than $100 a tonne for the first time since 2019, when eastern Australia was in the grips of a record breaking drought.
The USDA added another 2.12 million tonnes to the nation's wheat harvest, taking the total crop to 47.1 million tonnes, markedly higher than private forecaster estimates.
Further adding to pressure on prices wheat is being exported from Ukraine in spite of Russia not participating in the Black Sea Grain Initiative that allowed the safe passage of Ukrainian grain out of the region.
However, locally the story is different with prices still in excess of $400/t, especially in NSW and Queensland where drought is biting and there are concerns surrounding domestic supplies.
Episode 3 commodity analyst Andrew Whitelaw said there was a healthy dry weather premium built in the market at present but cautioned farmers not to expect basis levels of close to $200/t that were seen during the height of the 2019 drought.
"There is a lot more grain around than during previous droughts, there are parts of southern Australia, even up into NSW where it is not too bad at present, there is rain about this week so we will see what that does for crop prospects," he said.
"It may well be that more normal dry season where prices rise before harvest and then we see some harvest pressure on values."
"Historically, the prices on offer are strong numbers and would be considered attractive for most."
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