Cash prices for Australian wheat Tuesday hit a fresh multi-year low as traders and flour millers anticipate a bumper crop for 2016-17 (October-September), pushing Australian Premium White wheat down to $206.50/mt FOB Western Australia, according to S&P Global Platts' price assessment.
The market is at a six and a half year low, at levels last seen in late 2009, according to traders. It is also the lowest price since Platts started assessing APW in November 2015.
At the end of July, National Bank of Australia raised its forecast for the 2016-17 wheat crop to 27.2 million mt, one of the largest crops on record.
Besides expectations of a healthy crop, the downtrend may also have been driven by the need to clear stocks, traders said.
Over the last year, Australia wheat exporters have lost some of their market share in the Middle East and Southeast Asia due to uncompetitive prices, mainly to Russia or Ukraine. This led to poor sales volumes in the first half of the year, and fears of higher carryover stocks.
Offers for "new crop" Australian wheat exports were heard in the $208-$211/mt FOB WA range Tuesday for APW loading in December 2016 or January 2017, with buyers seen in the low $200s, traders reported.
Chicago wheat futures have been rangebound in the last month after falling substantially in June, while Black Sea prices have risen 7.5% in the last four weeks, mainly due to low harvest expectations in Western Europe. Russian 12.5% protein wheat was Monday assessed by Platts at $174/mt FOB.
