Blvd d'Espair Bowhill, Sth Aust | Redman - 2/3/2012 18:38 Be attributed to the removal of the various wheat boards in Australia? Our prices have been quite strong and am looking forward to a big drop this August when the CWB is killed.
A somewhat over simplified explanation of a complicated subject.....
The price of wheat in Australia is primarily set at CBOT in US cents per bushel. This is because far and away the greatest proportion of Australian wheat is exported. We are a big country, but a small nation, and dont have a use for that much domestically.
Then exchange rate has to be accounted for against CBOT price, and that's a biggy. Movements in exchange rate CAN make larger differences than movements in CBOT price. Local factors may have some effect. but other than extreme drought, usually not too much so, and even then it boils down to reflecting an import parity price, which is basically derived from CBOT price, Exchange rate , and shipping.
Because the Oz economy is basically commodity based ( as hard as some here try to ignore the fact) the Exchange rate is somewhat linked to general commodity prices. Relatively high general commodity pricing in general tends to equate to a higher Oz dollar, and conversely. lower general commodity pricing tends to equate to a lower Oz dollar.. This works to some degree as a dampening agent for pricing. But can be cruel on occasions. Australia holds a somewhat unique position in the world grain industry...... In terms of total wheat production, we are quite insignificant. Of hardly any consequence at all.
But in terms of world wheat trade we are significant. Maybe # 4 or 5.
Edited by Ham 2/4/2012 07:00
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