May 14, 2005

Dry weather pushes grain prices higher in Australia

Australia's deteriorating seasonal conditions have contributed to feed grain prices to tread upward throughout March, April and into May, impacting the profitability of feedlot operations. As dry conditions continue, some grain growers have been encouraged to hold off selling, while stockfeed demand has increased. Prices, however, remain below the drought-related highs reached in 2002-03.

Feed wheat prices rose to A$180/tonne in April, 7 percent higher than in February and 4 percent higher than in March and 19 percent lower than in April 2004.

Feed barley prices rose 3 percent on the preceding month to average A$176/tonne in April, before jumping to A$210/tonne this week. Feed oat prices, at A$185/tonne, were 5 higher than the preceding month and 12 percent higher than the same time last year. Prices have risen to A$220/tonne this week.

According to ABARE, record high world grain production contributed to world grain prices declining in 2004-05. Global prices are forecast to increase slightly in 2005-06, assuming there is a return to average seasonal conditions.