MEDIA ALERT Grain Futures and Options Update 23 August 2007
DETERIORATING SEASON AND TIGHT GLOBAL SUPPLY AND DEMAND IGNITE AUSTRALIAN GRAIN PRICES
January 2008 Milling Wheat traded at $340 per tonne today. This was the price peak during the drought last season. The domestic premium above the Chicago December 06 wheat price at that time was approximately $75 Australian Dollars per tonne. Currently, the premium over December 07 Chicago wheat is approximately $8 per tonne.
The following chart shows the current season’s wheat price (APW – NSW Port) compared with last year. The difference this year is that the prices currently trading are based on global market prices (export parity prices) rather than drought-induced import parity prices, as was the case in 2006. This suggests grain prices could increase substantially if the Australian season deteriorates and a domestic premium is pricedin. End-users, flour millers and intensive fed livestock operators such as the poultry industry, dairy, lot fed beef and piggeries may be interested in hedging their price risk for future grain requirements as the global supply and demand equation for grain is tight and production failure in Australia could result in prices not previously experienced.
Prices as at 23 August 2007 are; • ASX Milling Wheat for January 2008 delivery - $340 per tonne; • ASX Feed Barley for January 2008 delivery - $337 per tonne; • ASX Canola for January 2008 delivery - $510.50 per tonne; and • ASX Sorghum for May 2008 delivery - $292 per tonne.
