![World wheat prices have fallen in June. Photo by Gregor Heard. World wheat prices have fallen in June. Photo by Gregor Heard.](/images/transform/v1/crop/frm/5Q2j7ezUfQBfUJsaqK3gfB/ce3371a0-e21b-4981-bdb1-332cb0849404.JPG/r0_307_6000_3694_w1200_h678_fmax.jpg)
The tightness in wheat supply and demand balance sheets remains however positive news in prospects of other major grain crops such as corn has forced prices down once again.
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The late May pricing spurt on the back of Russian frost and uncertainty around Australia's winter crop plant is now a distant memory with further losses across both new crop cash prices and futures markets.
Australian old crop prices have declined, but not by as much with sustained demand from the southern livestock industry due to a lack of paddock feed.
The Australian Stock Exchange January 2025 wheat futures price hit a new contract low this week at $352 a tonne, down from a contract high of $437/t.
Overall cash contracts for new crop wheat have fallen around $10-15/t in the past week.
There has been a similar story in the United States where the Chicago Board of Trade (CBOT) July wheat futures contract has dropped to a low of US552 cents a bushel, down from highs of around US700c/bu in May.
On the Australian old crop front there were falls of $5-10/t.
Improved prospects in North America, combined with a US Department of Agriculture report earlier in the month that did not make the market anticipated cuts to Argentine and Brazilian corn crops, have been the major drivers of the fall in the market globally.
Locally, the transformation of the Western Australian winter crop, a month ago on a knife's edge but now generally sitting pretty and with the prospect of further useful rain over the next week, has weighed heavily on values, while Victorian and South Australian prospects are also slowly improving.
However, in spite of the fall in prices there are still plenty of factors that could ignite a rally.
A report from CoBank, part of the US Farm Credit System, found that a smaller Russian wheat harvest and lower export capacity would continue to keep wheat specific stocks at extremely tight levels.
The report said the Russian wheat crop was expected to be 9.3 per cent lower year on year, at 83 million tonnes according to official US Foreign Agricultural Service (FAS) estimates.
Other forecasters have even lower figures with some coming in at below 80m tonnes, which would put even more pressure on supplies.
Dry and hot weather is expected to continue the downward trend for yield potential started by damaging frosts in May.
Meanwhile, in terms of consumers, there is talk that drought in China will lower the Asian giant's wheat and corn production.
China has been relatively sedate with its purchasing program of late, with oversupply and declining consumption acting as a handbrake however falls in production could mean an increase in imports.
Asia's other powerhouse, India, is also expected to be a factor in the world wheat trade over coming months.
Trade rumours are suggesting India is considering reducing its duties on wheat imports in order to maintain supplies and combat inflation, however there has been nothing official yet from the Indian government.
It is a slightly surprising move given robust crop prospects, but food security and pricing is a critical motivation for the government of the world's most populous nation.
While there have been declines in grain values they have come off a high starting point.
NAB group economics associate director Lea Jurkovic said the rises in May were substantial.
"Wheat prices rose a little over 10pc in the month, as prices rallied on the back of poor seasonal conditions in Europe which weighed on global supply," Ms Jurkovic said.
"Canola and feed barley prices also increased in May, rising 7.1pc and around 7.8pc in monthly average terms respectively."