Farmers to reap record prices By Asa Wahlquist January 04, 2008 12:06am
AUSTRALIAN grain growers could truly be harvesting fields of gold this year, with the current wheat price to Australian growers now $130-per-ton higher than the previous record price.
Grain market analyst Malcolm Bartholomaeus said Australian farmers who had been able to grow a wheat crop would enjoy the high world prices.
"The AWB pool return this year is currently estimated to net growers, after all costs, payments of $360 per ton," Mr Bartholomaeus said. "To put that into context, the previous record high from the export pool was $236 per tonne back in 1995.
"In 2008, if we can hold high prices and return to more normal yields, it should be pretty much an all-time record in gross income per hectare across the grain belt."
Mr Bartholomaeus said wheat prices peaked in December, breaking the $US10-per-bushel barrier for the first time, then came back a little over Christmas.
But with traders now back at work, and a Pakistani buying tender, the price had started moving up.
"Global stocks are very tight, and we won't get any relief from that until the next northern hemisphere crop comes in," Mr Bartholomaeus said.
"In terms of the exporters, that is really late May, early June."
The US Department of Agriculture estimated that the US ended 2007 with the lowest wheat stocks for 60 years.
Mr Bartholomaeus said the market had been expecting an increase in global production but bad weather in grain-growing areas cut production. "Global output did actually go up a little bit last year, but not by enough to cover current consumption levels and so stock levels continued to decline. We ended the year in record territory."
Corn futures yesterday hit an 11-year high in Chicago, and soy beans approached a 34-year high. Those prices were driven by crude oil hitting $US100 a barrel.
"If you look at the soy bean price, or more specifically soy oil, its price is now certainly being driven by the crude oil price, because of the biodiesel substitutability," Mr Bartholomaeus said.
He expects prices to remain high, though not necessarily at the current level. "But it is not too long a bow to draw to suggest that we would have an expectation of wheat prices remaining above $300 per ton for the 2008 harvest."
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