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Ukraine war pushes grain prices up, poses ‘moral conflict’ for Australian farmers
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World wheat costs peaked at document ranges final week, with the Russian invasion of Ukraine impacting grain exports from the Black Sea for the foreseeable future.
Key factors:
- Australian growers weigh up whether or not to lock in contracts for this yr’s crop at inflated costs
- World wheat costs reached document ranges with grain exports stalled from Black Sea ports
- An agri-commodity strategist says the Chicago Could wheat futures worth peaked at nearly $US13 per bushel
However what does this imply for Australian farmers?
Though the Australian wheat worth has not risen to the identical extent, there was a big upswing with the crop promoting for near $400 a tonne.
Ariah Park grain grower Matthew Dart stated it was tough to justify the windfalls to be made on the rising market conserving in thoughts the human affect of conflict.
“You are attempting to make financial selections … and then you definately consider the truth of this case, and also you assume does that basically matter.”
Costs rise for rain-damaged grain
He stated he was capable of promote a few of their feed high quality wheat from final yr’s moist harvest at escalated costs.
However he was cautious of locking in bodily supply wheat contracts for subsequent season’s crop, regardless of the near $400 a tonne costs on provide.
“Whereas it is actually been a really moist summer season and there is a profile of moisture there … there’s nonetheless frost, mice, grasshoppers, moist harvests, all this stuff in entrance of us.”
Unattainable to choose high of the market
Grain dealer Machallie McCormack stated she was seeing extra curiosity in ahead contracts than typical right now of yr because of the rise in costs.
“At this stage of the sport, often none of my growers are taking a look at ahead promoting,” Ms McCormack stated.
“I’d say I’ve had inquiries for perhaps 10 per cent of my growers.”
She stated with costs rising like they have been, it could be unimaginable to choose the highest of the market.
“Most growers can inform you their worst crop ever … and that is often the place you suggest that growers begin.
Commonwealth Financial institution agri-commodity strategist Tobin Gorey stated the Chicago Could wheat futures worth peaked at nearly $US13 per bushel, but it surely had come again in current days.
“It looks like the storm of panic, as individuals attempt to get their palms on and substitute cargos they booked out of the Black Sea … has reached its peak.”
Nevertheless, he did not assume the market would retreat considerably, with the Ukraine harvest unsure and Russian exports impacted by sanctions.
Australian exports held again by delivery delays
There’s additionally a big hole between US and Australian wheat costs.
Mr Gorey stated this was largely as a result of Australia didn’t have the capability to extend exports resulting from a backlog in delivery.
“Proper now, we might in all probability export nearly any quantity that you might need, but it surely’s not flowing via as a result of we do not have the capability delivery sensible or logistics sensible at port,” he stated.
