The key to higher prices is export demand, a commodity analyst said
By Diego Flammini
Wheat prices were up Tuesday after news of a small Australian wheat harvest.
May wheat futures on the Chicago Board of Trade were up 20 cents to US$5.62 per bushel as of Tuesday afternoon after Australia’s Bureau of Agricultural and Resource Economics and Sciences (ABARES) pegged the country’s total wheat production at 15.2 million metric tons (MMT) or 16.7 million short tons.
That figure is down from ABARES’ projection of 15.9 MMT (17.5 million short tons) published in its December report.
That volume of wheat is also Australia’s lowest since farmers there harvested around 13.6 MMT (15.0 million short tons) of wheat in 2008.
“Wheat production is estimated to have fallen by 12 per cent to 15.2 million tonnes,”ABARES said in its Feb. 18 report.
Total “winter crop production is estimated to be well below average in all states …”
The news of Australia’s small wheat harvest wasn’t surprising.
In April 2019, the USDA projected Australia’s wheat production to be around 20 million metric tons (MMT) or 22 short tons.
That being said, opportunities are out there for wheat prices to increase further.
“The key moving forward is export demand and global production issues,” said Moe Agostino, chief commodity strategist with Farms.com Risk Management. “Seasonally, we can add to the rally. And what will China do if they buy five MMT? That could boost prices and further the strength of global wheat prices.”