Where is the grain market heading?
28 November 2019
Harvest is fast approaching and the focus is on to get the crop off, but in the meantime have you been looking at where the grain market is heading?
Unfortunately, at this stage, indicators aren’t showing a whole lot of upside concerning prices. Why?
Here are just some of the contributing factors:
- Mallee, Wimmera and Western District harvests are predicted to happen fairly close together, with minimal time lapses between the different regions. Therefore It is expected a flood of grain will hit the market at once.
- Coarse grains are still $15-$20 per tonne above export parody, this makes Australia’s grain too expensive to compete in the global market.
- There isn’t as many mouths to feed in the drought affected areas in NSW & QLD due to destocking. 3.9 million tonnes is estimated to be required to supply both the feedlotters and remaining stocked producers for the next 8-12 months, but a statewide crop yield of nearly 12 million tons is expected in Victoria alone this year. (CHS Broadbents, 2019)
- China’s anti dumping investigation into Barley has been extended by 6 months.
- Do you need cash at harvest? Don’t be a price taker, see what contracts are available for December/January delivery.
- Review your target price & look to see if at this stage any contracts are available that would meet this, if so, consider locking a portion now. What would you be more disappointed with grain going up by $10 per tonn or the price dropping $20 per tonne? Spread your risk!
- If you don’t have enough on farm storage and you are looking to warehouse, remember the handling and storage fees associated with this method. You may not be further in front by storing grain when you take these costs and labour associated with this process into account.
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