Australia's ABARES has revised higher its forecast for that country's wheat production to a record 34.4 million metric tons (mmt), up from its September estimated of 31.5 mmt. As seen on the attached chart, this volume is more than 10 mmt higher than both the country's five-year average and the 10-year average.
It is not often that record production is accompanied by near-record prices, but this is the situation due to the smaller crop realized in competing nations while Australia's ongoing wet pattern has led to quality concerns on the east side of the country.
As reported by Malcolm Bartholomaeus on theland.com.au, the Chicago soft red winter wheat contract converted to Australian dollars reached a high of AUD$435/mt last week while ending the week at AUD$424/mt. He stated there was only eight days in 2008 when the future traded higher than current levels, while the highest daily close over this period in 2008 was AUD$424/mt, the same as achieved last week.
The focus on the Australian crop this fall due to the short crop in several competing nations, including Canada and the United States, will only increase as the country gets a handle on overall quality. It will also be interesting to see how keen the Australian producer is to sell and deliver knowing the country's key role in meeting global demand in the months ahead.
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