THE brilliant start to the WA cropping season prompted a relatively high percentage of WA grain to be forward sold early this year.
CBH Grain head of accumulations Henry Carracher said varied appetite for risk meant it was difficult to put an exact figure on how much grain growers had locked into forward contracts already this year.
"But given the historically high prices available during the early months, it is higher than normal," he said.
Thanks to strong wheat prices earlier in the season, the percentage of wheat versus other commodities sold (like barley and canola) was high but since the value dropped off in the past few weeks barley and canola pricing had become more attractive and sales were slowly climbing.
Mr Carracher believed between 10 and 20 per cent of the 2014-15 WA crop had been forward sold so far.
He said there was a significant amount sold before seeding when forward prices were attractive.
But because prospective tonnes were well sold earlier than normal, growers had refrained from selling any further, despite the prices coming off.
He said it was likely growers would start to consider selling more tonnes once they had more of an idea about their supply during spring.
"Those who forward sold were probably in a well-sold position early on, so now they will try to ride out the lower priced environment until there is more production surety," Mr Carracher said.
"Once the market reaches that point I'd expect growers to consider pricing more grain then.
"Looking at the way the crop is tracking at the moment, those who sold early would be happy that they did so, as the market has come off significantly over the past few months."
Grain Brokers Australia broker Nic Sewell also recognised that in recent weeks there had been very little selling of grain across the board.
He said most growers who had completed some forward selling were now happy they had done some and were perhaps wishing they had done more, while those who hadn't were not traditional forward sellers anyway.
Mr Sewell said it was still early in the season and there wasn't any need for growers who hadn't locked away tonnes to panic at this stage.
He also pointed to the fact growers continued to wait to see what the rest of the season might bring.
"Once we are through the frost period and most of the State's crop is nearing development then growers will have a lot more confidence in forward selling if prices are at or above current levels," Mr Sewell said.
"Then again, many growers are of the opinion that playing the long-game might be the best strategy this year."
In terms of broking, Mr Sewell had already seen a lot of comparisons being made to the 2011 season when prices backed off before harvest and bounced back substantially by the middle of the year.
He said while growers were incredibly happy with the textbook growing conditions throughout much of the State, a crystal ball would have helped them to forward sell more tonnes.
"It's very hard to predict what might happen next especially with strong net longs from speculative funds and plenty of question marks over the Russian and Ukrainian political situation," Mr Sewell said.
"Most forward sales in recent weeks have been barley, as that appears to be where the value is."
With a relatively small $35 a tonne difference between APW2 and BFED (or $15/t for ASW) it was easy to see why.
Mr Sewell also continued to keep a close eye on Eastern States' conditions because it had the potential to impact on Feed prices following the tight supply year last year and current El Nino concerns.
Victorian-based Ag Concepts Unlimited senior client adviser and market analyst Angus Brown said the 20pc fall in international wheat prices during the last two months had east coast and west coast farmers asking how they could obtain some security against prices falling lower without locking themselves out of the significant upside the market now holds.
He said call options combined with swaps or physical sales could be used to construct collars that had the potential to take advantage of upside, while limiting downside for a small premium.
Mr Brown said east coast growers were in much the same position as WA growers when it came to forward sales and most of their forward selling had taken place in the autumn (March-May) in response to the good prices.
He said whether it was via swaps, futures or forward contracts east coast growers had committed 20-25pc of their expected crop.
But the forecast of El Nino had undoubtedly deterred some growers from making a commitment.
Mr Brown said Australian Stock Exchange (ASX) futures continued to track at a premium to the international market and had been for quiet some time.
"I've probably seen less forward contracting this year than usual, especially when it comes to swaps and futures because of the El Nino forecast," he said.
"Prices were good historically and a grower could have attracted $300-plus a tonne for Chicago swaps.
"There wasn't as much selling as I'd expect for those levels."
Like Mr Carracher and Mr Sewell, Mr Brown also wished he knew what would happen with grain prices in the coming weeks and months.
He said the northern hemisphere's wheat harvest was currently putting some pressure on the market.
"Based on historical data there's a 64pc chance of prices rising from here and a 36pc chance of prices falling," he said.
"Other things which could see prices rise are if the El Nino does have an impact on east coast production."
The situation coincided with news out of Singapore that Asian grain importers had started to delay their purchases in the hope that already low grain prices would fall even further thanks to an expected record global supply.