According to Rural Bank's June 2022 Cropping Insights, there is potential for above average production in all states, with wheat production estimated to exceed 30 million tonnes.
The Insights report states that strong export demand for wheat is underpinned by Chinese demand. Wheat exports to China to the end of April reached a record high of 3.78 million tonnes.
China's previous largest wheat imports for a full season totalled 2.39 million tonnes. Strong export demand is coming from traditional demand points in Asia (wheat), the Middle East (barley) and Europe (canola). Demand is supported by tight global supply caused by conflict in Ukraine and poor northern hemisphere production.
International pricing remains volatile as markets respond to any news impacting potential supply. News Russia may allow grain exports out of Ukraine ports has softened global prices.
At the same time, the poor condition of United States crops has provided support. Australian prices are following the trends of international markets but remain at a discount to international benchmarks.
In the report, Rural Bank said supply chain limitations prevent Australian exports from matching demand from importers. This situation prevents Australian prices from reaching parity with international prices however continues to maintain local prices near historical highs.
Australian grain prices will continue to experience volatility in line with international markets.
Eventually, local conditions will come into play. Should production remain positive, prices will face downwards pressure from current levels. However, tight global supply will ensure values remain at the higher end of historical prices, Rural Bank said.
