CBOT wheat forwards point to AUD 370/t as risk premium builds: RaboResearch

CBOT wheat forwards for 2026 now point to AUD 365–370 per tonne into mid-2027, up from AUD 325–335/t just three months earlier — and the world is not short of wheat. That's the core finding from new RaboResearch analysis by senior grains and oilseeds analyst Vitor Pistoia, who says the market is pricing the reliability of grain flows, not supply scarcity.

"The world is not short of wheat. The challenge is getting grain to buyers reliably and at an acceptable cost," Pistoia said. "Current wheat prices reflect geopolitical risk and supply-chain disruption more than supply scarcity."

In early October, the 2026 CBOT wheat forward curve was largely pricing in a drop in Black Sea wheat exports. Futures markets point to stronger prices holding into 2027.

What does this change for Australian growers?

Australian port prices should broadly track international markets, Pistoia said, and could remain well supported while export disruption persists. The catch: the premium can unwind fast.

"If we see a ceasefire, a new export agreement or a restoration of Black Sea export capacity, part of the current risk premium could unwind relatively quickly," he said.

Disruption to the Red Sea and other major shipping routes could actually improve the relative competitiveness of Australian grain, particularly into Asia. "Australia is well positioned in key Asian export markets compared with northern hemisphere exporters facing longer and potentially more disrupted shipping routes," Pistoia said.

That advantage could strengthen Australian basis into 2027 — though rising input and freight costs may claw back part of the benefit for growers.

Input costs are the margin killer

The report warns that production costs remain the bigger concern. Disruption affecting the Strait of Hormuz, the Red Sea and the broader Middle East is pushing on energy markets, fuel, freight and fertiliser supply chains.

"For Australian growers, stronger grain prices are welcome, but higher input costs continue to erode margins," Pistoia said. "Diesel, fertiliser and freight costs are being affected by many of the same geopolitical pressures supporting grain prices. In some cases, production costs have risen more sharply than wheat prices."

The numbers behind that warning:

• Diesel typically accounts for around 4–6% of on-paddock operating costs, though continuity of supply matters more operationally than its cost share suggests.
• Typical diesel lead times run 30 to 40 days.
• Fertiliser deliveries can take several months, and fertiliser is frequently the largest variable cost in wheat production.

"That means fertiliser presents a much larger planning and budget risk for growers," Pistoia said.

Weather risk shifts to 2027–28

Beyond the current season, the report flags El Niño as a factor to watch. Its impact on the 2026–27 crop is expected to be limited. The larger risk sits with eastern Australian grain production in 2027–28, if the event delivers lower winter rainfall and reduced yields.

Pistoia leaves growers with a practical frame: positive margins are achievable even when costs run hot. "Positive margins can still be achieved during periods of elevated costs, as we have seen previously," he said. "The challenge for growers is managing the timing, volatility and scale of both wheat-price and input-cost movements. The opportunities are there, but disciplined risk management will be critical."

With Black Sea flows, shipping routes and fertiliser lead times all in play, the 2027 planting decisions — and the hedge book around them — will be made against the most unsettled cost structure Australian wheat growers have faced in years.