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El Niño looms over grain markets

Warwick Long, Tuesday June 17, 2014 - 12:28 EST

Grain prices in Australia are staying higher than world market price movements due to fears of a looming El Niño.

The price difference is especially stark in areas of New South Wales and Queensland as grain traders worry about the impact of the traditionally drying weather system on an area already recovering from drought.

Grain trader, Graham Allen, from MC Croker, says the concern means Australian prices are performing well in a falling world market.

"We've got a price difference," Mr Allen said.

"Our price has remained strong relative to US futures."

"We've been able to absorb $22 of that drop and that's mainly through the threat of the dry conditions going forward with the threat of El Niño."

Nathan Cattle from ProFarmer Australia says a price spread between northern grain producing areas, like Brisbane, is about $50 a tonne more than southern areas, like Port Adelaide.

"The market is trading forecasts and trying to make a guesstimate over how that is going to impact supply and how that is going to impact on their trading book or the demand up there."

"The trade is factoring that into prices now."

"A lot of guys have had a below average start to the year, unfortunately."


© ABC 2014

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