Grain prices have risen by their biggest margin for the year, with Australian wheat prices rising to around $370 a tonne for the 2024-25 crop for APW quality grain.
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This represents a rise of around $30/t, spurred on by a combination of factors as the northern hemisphere hits its critical spring growth stage.
Western Europe remains soggy, with major producers such as France and Germany set to lose yield due to excess moisture.
Russia is increasingly dry, with concerns over potential for yield losses in the world's major wheat exporter, while conditions in the US wheatbelt are also becoming dry.
Commodity analyst Tobin Gorey, the Watchlist, said northern hemisphere crop issues had greatly expanded in recent weeks, with concerns over Russia and eastern Ukraine leading the charge.
Private analysts have flagged a year on year drop in grain production in Russia of as much as 10 million tonnes.
Locally, there is little rain on the horizon for the next fortnight, meaning a true autumn break is not likely until at least mid-May which begins to put pressure on Australian production outlooks, although analysts caution it is too early to make many predictions regarding the size of the Aussie crop.
Mr Gorey said there was rain forecast through NSW this week which would bolster prospects there, however the south and the west remain dry for the foreseeable future meaning regional basis levels could start to diverge, with higher prices in those areas yet to receive rain.
On the demand side, the Foreign Agricultural Service (FAS) of the US Department of Agriculture (USDA) has reported that wheat stocks in Egypt, the world's largest importer of wheat, have dropped to their lowest level since 2002-03, with higher demand driven by a larger population and foreign currency issues causing the drop in stocks.
The FAS estimated Egyptian wheat ending stocks for 2024-25 are expected to slide to 2.48 million tonnes, about half the amount that was in reserve in 2022-23.
World demand for grain continues to be strong, with the Ukrainian department of agriculture reporting national exports for the 2023-24 marketing year of 39.5 million tonnes, around a similar figure as the year before, in spite of supply chain disruptions from the war.
Commodity analyst Andrew Whitelaw, Episode 3, said there had been a change in sentiment among the investor community.
"Previously investors have been shorting the market, that is betting on it falling," he said in an analysis of grain markets.
"Recent concerns and the pop in the market have led to a short-coverage rally where those betting on a fall have to buy back their positions."
He said the potential of a La Nina weather event developing was also bolstering the market.
"A La Nina can mean drier conditions in parts of North America, so if that develops it will be something to watch."
In other bullish news for grain markets the International Grains Council has slashed total global grain production estimates for the 2024-25 year by over 10 million tonnes.
