AUSTRALIAN farmers are largely shunning forward marketing options for new season crop, with futures coming under the traditional North American harvest pressure.
Chicago Board of Trade December '09 wheat futures have come back almost 20pc since the start of June to sit yesterday at US583 cents a bushel.
The futures market is reflecting a relatively painfree US harvest, which is putting pressure on prices.
Callum Downs commodity analyst Malcolm Bartholomaeus said the pressure on wheat prices was normal for this time of year.
"We're still travelling within expectations, there is no cause for alarm," he said.
"If the prices improve, as they often do following the northern hemisphere harvest, then we're right back in the middle of the range.
"Right now, there's plenty of wheat around internationally, and there's no reason for prices to go up."
Mr Bartholomaeus said the prices were not enough to tempt farmers.
"There were some attractive prices back in February, but not many growers took advantage of them, due to concerns about production risk. There's no point in getting involved in forward selling the crop as prices sit now."
Now, even though a good break across much of the nation's wheat belt has boosted prospects, Mr Bartholomaeus said prices were simply not good enough to garner interest.
"The prices are just not attractive relative to the production risk," he said.
One of the areas with the best crop potential is north-west New South Wales, where heavy summer and autumn rainfall has combined with a soil type well equipped to store moisture to have farmers confident of a crop of some description, even if the season turned off now.
However, Mr Bartholomaeus said there had been little marketing activity in the area.
"There isn't a big culture of forward selling through that region; they look more towards storing grain and marketing it post-harvest," he said.
In terms of old crop, Mr Bartholomaeus said both interest and availability was declining.
"The available tonnage is tightening, but the shipping program has slowed right off, meaning any growers holding wheat still would be vulnerable," he said.
Meanwhile, AWB has released its initial pool returns for the 09-10 season, with a quote of $310-320 a tonne for the benchmark APW grade.
AWB's Australian Commodity Management spokesman, Stuart Richardson, said this estimate of pool returns would give growers some of the price information needed to factor into planning their grain marketing for the 2009/10 harvest.
Internationally, he said harvest was swinging into gear in many countries, and while production was expected to be down on last year’s big harvest, there was still scope for further improvement.
"While production is expected to be lower than last year’s record crop, there is still plenty of time for rain in the major exporting countries to boost maturing crops and lift yields," he said.
Mr Bartholomaeus said there were issues with dry weather in key production areas, especially in Canada and Europe.
"There are drought issues in Alberta and western Saskatchewan, while there are pockets of dryness in Europe," he said.
"The Europeans expect to be 20 million tonnes down on last year's production."
Email a friend