Dry Australia weather could be helping wheat prices

 

 

Australian wheat prices might have stabilized after earlier falls "as weather conditions begin to raise the possibility of yield reductions in the northern cropping belt," marketing and logistics concern GrainCorp Ltd. said Tuesday (August 18).

 

New crop wheat prices are now A$20 (US$16.15) to A$25 (US$20.64) a tonne above export parity and "whether the market can build further premium is in the hands of the spring rainfall," the company said in a weekly market report.

 

Australia's ASX January milling wheat futures, the most active domestic contract, found a base around A$235/tonne last week after falling from a high of A$253 the previous week. The contract settled Monday at A$242/tonne.

 

Dry weather is impacting barley and sorghum prices as well, GrainCorp said, adding that old and new crop barley values in northern New South Wales and southern Queensland continued to strengthen as the number of animals in feedlots rose, increasing demand for grain.

 

Further impetus for rising prices came from warmer weather conditions in these areas, with this further drying cropland, it said.

 

Sorghum markets firmed last week, in particular in the Brisbane port zone, reflecting a combination of dry weather, lack of grower selling and continuing domestic demand, it said.

 

Australian canola remains on track to reach forecast production of around 1.7 million tons in the crop year ending March 31, 2010 but rain in the central and southern parts of New South Wales would be welcomed in the next two weeks, it said.

 

Barley prices in southern Victoria and South Australia weakened on the back of milder weather conditions, and amid little buying interest from consumers, it said.

 

Malt barley values traded lower in the southern states following reports of European Malt offers in the Asian market well below current Australian values, it said.

 

Scattered rain and mild conditions throughout Victoria helped ease any nearby crop quality concerns, it added.