High yields to offset four year low in wheat prices

After a number of challenging growing seasons, farmers are hoping to offset softer commodity prices with higher yields this harvest. Success may well depend on timing.

While wheat prices are at the lowest level in the last four seasons, extremely high yields should be enough offset the effect of the depressed market and make for overall positive results this season. Substantial wheat supplies available in the world are responsible for the softer prices.

There are also concerns locally around wheat quality and protein levels, which is causing the market to stagnate and making farmers hesitant to forward sell in any style. Kevin Schwager from Priag Marketing says wheat yields around the district should be high enough to deliver strong results despite poorer prices. “Potentially this year we’ve got very high yields on wheat, so when we marry yield with price to get a gross margin it should be very good. That’s assuming we can get this crop off the stalk and into the bin without any adverse weather conditions. Overall the spirits are very positive. We can talk about the price being low but the thing that growers are focusing on is the margin and a return that’s going to be very healthy.”

Many farmers are trying to hold off on pricing decisions until during or after harvest in the hope that the market improves, but prices will struggle to rally during harvest due to the volume expected. “In the Walgett Shire the growers have had no crop now of any substance since 2012 so they are looking to see cash coming in. Farmers in Northern NSW today have a significant amount of on farm storage so the capacity to store is unquestioned when coupled with the ability to warehouse, then it becomes a function of cash flow needs and what the price may do post harvest.” While there are many variables affecting price of wheat, at the moment the price can roughly be pegged at $235/240 per tonne delivered Newcastle. Compared to a high early in the season of $291/tonne and a high last year of $341/tonne, the price is relatively soft. Very few farmers have forward sold compared to other years because the market simply hasn't been at a level sufficiently high enough for the grower to think about forward selling.

Some chickpea crops that were almost killed in extremely wet weather seemed to have recovered and dried out to the extent that some growers are now watching a very good crop developing. Combined with fairly strong prices the result should be good for chickpeas.

Posted on Tuesday, 01 November 2016
in Latest News

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High yields to offset four year low in wheat prices

After a number of challenging growing seasons, farmers are hoping to offset softer commodity prices with higher yields this harvest. Success may well depend on timing.

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