Harvest standoff and it is yet to kickoff!
by Warren Lander
Harvest is underway in the Central West with barley starting to come off. From all reports it has again excelled in a difficult season with both quality and yield surprising all parties involved, which I think is a great result showing what diligent management and the better farming techniques that are being used are second to none.
The current issue that many growers are facing is the decline of grain pricing of the current crop. It’s a known fact that the availability of grain is no more or less than this time last year, and grain pricing is up to $100mt below last year’s pricing, and the livestock producer is going into another summer with little to no paddock feed available. Growers are now asking themselves ‘what is my grain worth, and what pricing should I start to sell at and where have all the buyers gone’?
With this in the grower’s mind, we are seeing them dig their heels in and holding onto their crop. This has seen reduced tonnage offers being made to the trade, which is creating somewhat of a floor in the market. The consumer does not want to own grain at current levels, resulting in running their stocks very short and only paying the price wanted to source the grain when needed. In other words are we going to see a shootout at the OK Corral.
But before that happens, a few things must be considered. Currently we are seeing an inverted market in Central West and Southern NSW, with short term barley pricing exceeded the long term view of the trade, which is a reported combined 3 million MT barley crop in Victoria and South Australia, and a Grain Industry Western Australian report of approx. 4 million mt barley crop, along with large carry over of the 2018 harvest. So on paper this points to ample supplies being available.
As for wheat markets, is the consumer telling us that at the current point of time the local grain market is overpriced? Does this indicate that they will resource it from further afield, maybe from a different port zone or state? We really don’t know… Which is why buyers are scrambling for bids from the consumer and are very relucent to go out on a limb when it comes to higher pricing. Finally, with another hot and dry summer that could be ahead of us, the livestock producer is not as bullish as what he was last year, resulting in reduced numbers to feed as they have sold stock to reduce workload and cost.
To really see the consumers pricing hand, in my view it will be once the Victorian harvest starts and the tonnes start to roll in. If the Victorian grower is happy with the price, they will sell, but if not we are back to the OK Corral again with the consumer and grower 25 yards apart.
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