THE surge in global wheat markets is remarkable.
Fuelled by fear of crop shortages in the Black Sea area, Chicago futures markets have risen another 10 per cent this week.
This takes the market rise to a total of 34 per cent from the low in the first week of June.
Analysts have predicted exports of Russian wheat could fall from 22 million tonnes in 2009-10 to just 12 million tonnes in 2010-11.
This year, world wheat buyers have tended to feel comfortable buying only as required.
Trouble in the Ukraine and Russia, combined with investors who were short, continue to push wheat prices higher.
Old-crop APW wheat prices have risen $25 a tonne this week to $255 a tonne delivered to Geelong and Melbourne ports.
Domestic prices for general-purpose wheat for the stockfeed markets are also up $15 a tonne to $245 a tonne.
Most attention will be on new-crop prices and whether they will be sustained for sufficient time to impact on the pool prices that many traders now operate.
New-crop APW prices are $20 a tonne higher this week, reaching $273 a tonne for multi-grade APW on Monday.
Traders are analysing the market for the longevity of this rise.
Is the price surge built on sustainable fundamental supply and demand factors or is it built on some short-term market shorts combined with fear?
Australia could have its own share of supply concerns with Western Australia experiencing some dry times.
Most West Australian growers are suffering a decile one rainfall (rainfall in the lowest 10 per cent of historical data) for the three-month growing season since May.
Fortunately, southeast Australia is enjoying a favourable rainfall and most areas in Victoria received between 35mm and 50mm last week.
Barley prices will be supported by higher wheat prices as the two energy grains compete for inclusion in many stockfeed rations. As the cheapest sources of energy for most stockfeed rations, barley prices have risen sharply up $35 a tonne this week.
Earlier this week, buyers of old-crop F1 feed barley were bidding $215 a tonne delivered to the Goulburn Valley and Melbourne. Similarly, new-crop barley prices are higher on export markets.
Malting barley prices are up $23 a tonne to $268 a tonne delivered Victorian ports for gairdner and baudin malting barley.
