DEMAND for basic food commodities, both in Australia and around the world, should keep wheat prices at a decent level for the time being, according to CBH.
On Thursday last week, the Australian dollar took a further three cent decline and was down to 55.02 cents on the US dollar.
As a result Western Australia saw attractive grain prices, with Australian premium white wheat hitting $400 per tonne for crops from last year, while feed barley hit $310/t to $315/t.
New crop prices were also very attractive, with canola reaching about $660/t, APW getting to $350/t and feed barley to $285/t.
That resulted in some growers forward selling parts of their crop which they haven’t even put in the ground yet.
CBH general manager marketing and trading Jason Craig said it was a very interesting time and there was a lot of uncertainty.
“There have been a lot of other previous significant world events, although probably not as big as this, like the GFC, SARS and the Asian financial crisis and what we saw in all of those times was demand for basic food commodities like wheat,” Mr Craig said.
“We don’t have a crystal ball and the market is extremely volatile as we’ve seen with stocks and currency, but we expect there will still be demand going forward.
“Pricing at the moment is really being guided by the Aussie dollar, so if that stays low we’ll continue to see some really attractive wheat prices.”
Mr Craig said CBH was yet to face any significant logistical challenges as a result of coronavirus, but that they were seeking clarification from the government on how the 14-day isolation rule applies to shipping vessels.
“With vessels coming back from Indonesia, it’s a seven to eight day sailing time, so we’re seeking clarification on if that means vessels have to stay a few extra days out at sea before they can come in,” he said.
“We also get vessels from the South China Sea and other places where they’ve already travelled for more than 14 days, so we’re working with the government to manage that.”
Over the past 30 days, Chicago wheat has been down about seven per cent, while oil has been down 43pc, something which Mr Craig said reiterated the importance of basic food commodities.
“Premier (Mark) McGowan has recognised the importance of the Western Australian ag industry and the role we provide in exporting basic commodities,” he said.
“There has still been demand around the world and countries that are net importers of food will continue to ensure their populations have adequate food supplied.
“If you talk to food manufacturers in Australia, they’re going at full production and utilising some additional stocks, but there is ample grain in Australia to be able to supply that until we see the new crop.”
Overall, Mr Craig thought it was unlikely the Australian grain industry would not be affected as severely as other industries like hospitality, tourism and aviation.