PRESSURE has been applied to both the export and domestic markets and wheat prices are significantly down this week.
Prices for flour milling and stock feed wheat have fallen $10 a tonne.
Grain exporters buying H2 wheat with a minimum protein content of 11.5 per cent are paying $214 a tonne delivered to Portland.
Prices for higher-quality H1 wheat, with a minimum protein of 13 per cent, are quoted at $222 a tonne.
Stock feed mills in Melbourne are also able to buy wheat at $205 a tonne delivered this week. All these prices are $10 a tonne lower than last week.
Some stock feed mills expect prices for these lower grades to weaken further and are waiting until the market falls below $190 a tonne.
Export prices were affected by announcements made last week by the US Department of Agriculture.
In a triple-whammy move, the USDA increased US wheat production forecasts, lifted its projected world stocks of wheat and reduced US wheat exports.
After buying wheat stocks since the start of the year, US investment managers sold off wheat in the face of a very bearish picture.
This correction in wheat prices has been coming for some time as US wheat has not been competitive.
US wheat values fell more than 11 per cent last week.
Traders say that the bullish US wheat market has been significantly battered.
On the domestic market, growers in southern Victoria have considered their price targets for wheat downgraded from the recent harvest rain.
This General Purpose wheat can now be purchased at $205 a tonne delivered to Melbourne stockfeed mills.
Much of this wheat is unsuitable for flour milling due to excessive screenings, low grain density or low falling number.
Grain prices are reflecting the cycle of supply and demand. The International Grains Council in London has reported the building production levels of world-wheat production over the past three to four years.
This has lead to a building of stocks carried over from one season to another. The demand for wheat has not been able to match increasing wheat stocks, and prices have fallen.
The supply-and-demand cycle continues in the northern hemisphere where North American farmers are expected to move to more profitable crops and produce less wheat this year.
Canadian farmers are showing more interest in pulses and canola.
The Canadian Wheat Board expects domestic wheat production to fall from 26.5 million tonnes last year to 24 million tonnes this year.
