AWB’s estimated pool return for benchmark APW wheat in the eastern pool is steady at A$362 a tonne, with FED1 at A$277 a tonne. In AWB’s western pool APW wheat is steady at A$380 a tonne while ANW1 noodle wheat is down A$12 to A$468 a tonne (FOB, excl GST).
AWB General Manager Commodities Mitch Morison said the broader world wheat market was currently being supported by demand for corn, however the value of Western Australia’s recent noodle wheat crop was being eroded by a willingness in the trade to sell at smaller premiums above APW.
“Growers in Western Australia would be well aware that the noodle wheat harvest was relatively small and overall stocks are tight, so would be understandably dismayed to see exporters simply unwinding the premiums that have been built up for so many years, yet it is what is occurring,” Morison said.
“The broader international wheat market is currently responding to last night’s U.S. Department of Agriculture reports on U.S. new crop sowing estimates and grain stocks, which while technically quite bearish for wheat, were strongly bullish for corn. Corn stocks were reported as well below expectations, which has put old crop corn ending stocks at an extremely tight level. This will flow through to new crop corn also unless ideal weather conditions are seen through the growing season.
“The resultant lift in corn prices has pulled wheat futures with it, creating a rally at least for the short term.
“The challenge for wheat is that there is no fundamental change in the wheat picture. We are very much in a weather market where crops in Europe and the Black Sea region are looking positive, while significant parts of the U.S. cropping region are very dry, all of which means wheat will remain volatile for some time to come.
“While most of our EPRs are holding at present, the stronger Australian dollar is placing pressure on grower returns.
“Feed wheat from Australia continues to be supported, but the current spread between low protein milling wheats and corn is under pressure as importers look to good new crop prospects in the Black Sea region and Europe.”