PRICES for Australian wheat are still too high for world markets.
According to traders, world wheat buyers are not attracted to Australian wheat, even though prices to growers have declined about 30 per cent from last year's harvest.
Egypt, one of the world's largest importers of wheat, has continued to increase demand without supplies from the US and Australia.
After buying 300,000 tonnes of European wheat late last month, Egypt last week bought another 240,000 tonnes from Russia and Germany. Eastern European wheat also traded into Yemen last week.
These are traditional markets for Australian wheat, but our prices are at least $30-$35 a tonne higher than the competition.
This week, prices for APW wheat are quoted at $220 a tonne delivered to Geelong, while stockfeed wheat for prompt delivery to Melbourne is commanding $225 a tonne.
Last week, the Canadian Government authority StatsCan surprised the market with a forecast for Canadian wheat production of 26.5 million tonnes, an 8 per cent increase over its October estimate and about 1.5 million tonnes higher than other estimates.
Turkish wheat production is also expected to be 14.5 per cent higher than last year.
On the local supply front, things are quiet.
Grain merchants report that growers are focused on the delayed harvest and very little grain has been contracted to either cash or pool sales.
While there appears to be few reasons why Australian wheat prices should increase, some traders are reluctant to sell short in a market where farmers are not selling.
The next few months could be nervous times for both buyers and sellers.
The market has the potential to be highly technical and reliant on gaining access to supply and demand immediately prior to export.
Many headers were back harvesting by the middle of last week, but the rain has taken its toll on grain quality.
In areas east of Warracknabeal, the continued exposure to rain has caused some wheat grains to sprout.
Early industry estimates put the quality of Victorian wheat produced this season into three grades.
Equal production of APW, ASW and GP wheat is expected.
Very little H1 wheat above 11.5 per cent protein or feed wheat below 200 Falling Number is forecast.
This illustrates the higher yields and lower protein of many crops that will fail to meet the 10 per cent protein minimum of APW.
While wheat crops have been affected by rain, barley and oats are expected to bear the brunt of major damage.
