Wheat markets have been sluggish across all sectors, in particular soft milling wheats and feed wheat, but there is a little more upside in the high protein market.

Substantial amounts of ASW quality and below wheat in Australia and big export programs out of the Black Sea are keeping the pressure on the bottom end of the wheat market, while a relative scarcity of hard wheats meant prices in that corner of the market were holding relatively steady, in spite of the abundance of wheat overall.

Commonwealth Bank commodity analyst Luke Mathews said the prices were a function of a record wheat production year across the globe.

The WASDE report had wheat production for 2011-12 at 689 million tonnes, up 37 million tonnes on last year, with stocks back above 200 million tonnes at 208.5 million tonnes, well above the stocks to use ratio deemed adeqauate.

Bryce Knorr, senior editor at Farm Futures magazine in the US, said the report was especially bearish for wheat, with the USDA cutting its forecast US exports.

However, markets have not reacted to the news, with the Chicago Board of Trade March 12 contract remaining steady in the past week at a tick under US600 cents a bushel.

Rabobank believes the outlook will remain bearish until the focus turns to the northern hemisphere planting season.

Commodity analyst Luke Chandler said he expected the situation to continue until more is known about demand.

Storey Marketing Services’ Ron Storey said the corn complex was no longer able to hold wheat values up.

“There’s a lot of feed wheat around in Australia and that is going into Asia, so while there is the corn shortage in America, end users in Asia are happy to substitute wheat.

“Along with Australia feed wheat, there is also lower quality grain coming out of the Black Sea which is very substitutable for corn.”

Mr Storey said Australian growers could not expect significant basis level gains due to domestic use.

“Domestic use is pretty stable, especially in flour milling, poultry and pigs.

“The variables there are dairy and lot feeding and the high Australian dollar means there are less cattle on feed as they are less competitive overseas at present.

“In the dairy industry, after the years of drought, many farmers now have a lot of pasture and fodder and are not so reliant on cattle, while foreign exchange also has an impact on numbers there.”