ALONG with international prices moving the right way in recent weeks, Australian growers may also benefit from strong competition at ports.
As marketers look to fulfil shipping slot and rail arrangement obligations, premiums of up to $60 a tonne have been paid for prime shipping slots in South Australia, while there have also been healthy prices paid in Western Australia, according to ProFarmer analyst Hannah Janson.
She said while some of this money was reimbursed upon execution, it was not refunded if the slot was not used.
“What we see is the cost of not doing business - marketers are keen to meet these shipping slot obligations, rather than risk forgoing the upfront cost,” Ms Janson said.
And while there is not the same premium for shipping slots on the east coast, she said there were also technical factors encouraging marketers to accumulate grain.
“Some merchants may have take or pay rail arrangements that need to be paid for even if they are not used. This can encourage buyers to enter the market when they otherwise may not have.”
Her views were backed up by Emerald Grain acting group general manager of trading, marketing, origination and communications Tom Howard.
“If you hold one of the early harvest slots for a premium, every marketer likes to see them covered.”
Ms Janson said growers could make sense of what was happening and what opportunities it presented by understanding the timeframes of the shipping slots in their port zone, whether there was a heavy front end export program in their port zone and knowing where the premiums had been paid which traders should be less willing to default on.
Along with this, an understanding of the surplus or deficit position in their state, based on shipping stem bookings and normal domestic use against projected production would also provide a good tool for helping make sense of the market.
In terms of the international market, Mr Howard said prices had been rallying in the past fortnight.
“We’ve seen logistics issues and US farmers holding crop push oilseed values up, but there has been a lift right across the board.”
“Wheat has bounced back well to above US500 cents a bushel on the Chicago futures market and at these values it might represent an opportunity for Aussie growers that haven’t priced some grain to do so.”
Mr Howard said initially the price gains were based on modest weather concerns surrounding the Russian and American winter crops, but had been intensified by technical buying from the trade.
Locally, he said the northern harvest on the east coast was in full swing, with below average yields but good quality.
“These crops never were set up for a big year, so we haven’t run into large scale problems with quality, there seems to be a good percentage of hard wheat there.”
In terms of a national wheat crop, he said estimates still varied between 22 and 24 million tonnes.
“It’s potentially below average, but not massively so, the disappointment lies in the fact so much of the country looked so good early in the year.”
He said basis levels in Australia remained resilient, but said it would be interesting to see where it would go once more grower selling kicked in.