With record local supply and significant global market issues in play, the opportunities for Australian grain growers are significant. Big political and weather issues remain, including the Russian / Ukraine war, China market access and the transition out of La Nina conditions.

Read on for our thoughts.

Export Margins Explained


  • Exporting grain remains the best low risk price option
  • Tension in the Black Sea continues to escalate 
  • China’s recent actions potentially suggest an increased likelihood they may lift the Australian barley ban.

A record crop defines the local Australian situation again this year, with yields and quality surprising in most production regions. Flexi Grain is working with an Australian wheat crop of over 40 mmt, which is a clear record and up 10% year on year. The barley crop is also a record of 14.6 mmt, but is only slightly higher than last year, owing to some lost acres across many regions.

In Victoria, we see a record wheat crop of approx 6 mmt and barley of 3.3 mmt, with wheat up an amazing 50%.

For our immediate neighbors, SA is sitting on a record production, in a huge swing from last season and after a tough start to the season. The NSW crop is down significantly year on year, with area reduced though Central and Southern areas owing to the wet start and yield loss evident in the South owing to the wet finish and flooding.

High carry in stocks were brought into this season, primarily in NSW and WA where crops were unable to be moved last year. This adds significantly to our export task and essentially ensures high carryout stocks at the conclusion of this season, even with the record export program we expect.

Crop quality has been very surprising, with some seemingly unexplainable protein levels in crops across SA, Vic, NSW and QLD. The grain trade and domestic consumer were expecting low protein, with plenty of feed wheat stocks owing to the soft season and wet finish in many areas, but the actual is very different from the expectation. This has caught the market off guard and shorted the lower grade in both local and export positions and has seen APW and H2 market premiums come back down to earth to trade very tight spreads to ASW / Feed. This same dynamic has seen Barley become very cheap into domestic markets and significant switching in feed rations towards barley use wherever possible.
Globally the market is off the highs and currently at peace with the major export supply issues we have faced for the last 12 months.The funds are at or close to record short, focussed on the macro and El Nino forecast, which is a major catalyst for funds deploying significant short positions.

Russia / Ukraine – The Defining Factor for Wheat

The situation remains volatile, with Russian aggression stepping higher in recent weeks and narrative escalating. 

Western weapons commitments to Ukraine are increasing on both a volume and technological front, which is pointing to the potential for both a major Russian offensive when the weather allows and a possible major Ukrainian offensive – Both of which are not positive for grain exports from either country.

The grains corridor currently works despite some frustrating delays to inspections and long lines at the Bosphorus. Shipments from Ukraine are not seeing major interruptions and there has been no bad news to note. Russian pace has been OK considering the weather and time of year, but it’s not on pace to exceed usda / market export expectations.

The Russians have hinted at export restrictions recently and in any type of escalation we should expect to see export limitation / export tax implemented. This is a bullish factor if it comes.

We see this situation as far from over and think risks of potential escalation should be considered in marketing decisions.

In the event of serious Russia/Ukraine escalation, we will see global markets respond strongly, with futures leading global export markets. In the record crop environment, local markets are likely to significantly lag both international futures and global export markets. Basis should fall significantly and export margins will grow significantly.


While a war escalation will certainly add something to barley pricing, the real juice is in Chinese market access. Recent diplomacy efforts seem to be yielding some positivity from the trade, with barley prices supported out of harvest lows which is at least partially based on China rumors. 

We note some very recent positive flags for China, including the amendment of registered Australian exporter lists, which have been left unchanged (from the China side) since December 2020. We also note a rare change in phytosanitary export requirements for Australian barley to China implemented on 25/01/23, which we find very interesting.

There is nothing sure here, but we see the situation as a serious consideration for barley marketing decisions.

Full China access would result in an easy $20/mt to prices, but probable $50/mt. Australia would be transacting into a far higher value and larger market, with a much larger forward book. We also carry a significant freight advantage to China vs competing origins. Barley elevation margins are likely to spike significantly if we gain full access here.


Starting with Australia, we see the El Nino transition forecast as something to watch, but do not see a huge weighting into marketing decisions. We have a significant moisture profile across most regions, significant forced fallow in NSW, record carry out of grain and a decent forecast for the next few weeks.

Globally El Nino is friendly to production (Northern Hem) and therefore triggers funds to short wheat (even more), which is the reverse of what we have been seeing for the last few years. The sheer size of fund activity in the space now makes the weight of the funds across all futures markets unignorable to the physical trader and grower. This will cap bullish moves longer term, unless we see a big catalyst.


Argentinian drought has been the most pointed issue for Corn and the feed complex. The last few months have been disastrous for rain and have caused significant delays and some acres loss on the corn plant. Over the last week we have seen good rains and good forecasts. If this turns into a change in pattern, we will see a significant bullish dynamic taken from the market. This is especially relevant to lower grade wheat and barley.

India wheat stocks position has been widely viewed as a significant risk factor in the wheat market for the last few months. We are currently in a very tight stocks situation, with an export ban in place and an extremely high price local environment. We are reliant on a very good crop come harvest in Mar/Apr/May and cannot afford any issue with the key finishing period with specific reference to heatwave conditions like we saw last season. A crop issue could see India enter the market as a significant wheat importer during 2023 and early 2024.

Current forecast is for cooler and wet conditions for main production regions, which has the trade very comfortable with the Indian situation for the time being. If weather remains favorable, we see wheat lose an explosive bullish point.


The record local crop will lead to a subdued and unresponsive relative price environment in Australia. Demand for Australian exports remains robust and export margins are likely to stay in place for the majority of the season.

Global markets remain focussed on Russia / Ukraine and this will eventually define the wheat market.

Corn will be directed by South American production conditions for the mid term and Barley is China.

Holding local stock without exposure to export capacity to take advantage of any of these global factors will likely see low price participation.

There is significant risk associated with swaps / basis positions due to record crop combined with war risk, not dissimilar to last season.

If you would like to know more or find out how Flexi Grain can help you gain exposure to the export market, call and have a chat with your local regional manager.

Dustin Lovell
Regional Manager (VIC)

M | 0428 861 988
E | dustin.lovell@flexigrain.com.au


Sam Grieve
Regional Manager (SA)

MOBILE | 0400 688 515
EMAIL | sam.grieve@flexigrain.com.au


Henry Vaughan
Regional Manager (WA)

MOBILE | 0497 259 113
EMAIL | henry.vaughan.com.au


Jarrod Tonkin
Regional Manager (NSW)

M | 0408 321 123
E | jarrod.tonkin@flexigrain.com.au