Australian wheat price trend to remain low following global trend

The world wheat price is forecast to remain low in 2020–21, at an average of US$222/MT. This is a marginal increase from 2019–20. A forecast fall in production in some major exporting countries will be partially offset by weaker world demand for discretionary foods due to restrictions introduced to slow the spread of COVID-19.

Milling wheat has few substitutes and relatively inelastic demand as a staple food. This means that the underlying demand for wheat is unlikely to be significantly affected by the COVID-19 pandemic.

Weaker global economic growth as a result of COVID-19 is likely to reduce demand for higher-value wheat flour products (cakes, biscuits, and pastries) and higher-value meat and dairy products. The fall in demand for grain-fed meat and dairy products and an abundance of feed grain substitutes will result in lower feed demand for wheat.