Vying for a slice of Asia

21 Mar, 2014 01:00 AM
China has invested a lot in Africa, the biggest single investor in Africa in the last 100 years.

AUSTRALIA may look at the insane growth statistics coming out of Asia in terms of grain consumption and think it is sitting pretty, but other key grain production zones have ambitions to break into the market as well.

Speaking at the recent Global Grains Asia conference in Singapore, Frederico Humberg, general manager at Gavilon Brazil, said Brazil’s growing grain production meant eventually there could be a further 40 million tonnes of grain to export from the South American nation.

He said in particular the popularity of the "safrinha" or second corn crop, grown in rotation with soybeans, was increasing total production.

He said there was significant land suitable for cropping available, with grain production taking over from cattle producing land.

Investment is coming not only from traditional agriculturalists, but from financial groups and funds.

Mr Humberg said Brazil would be particularly strong in oilseeds, with farmers at present finding soybeans the most profitable crop.

However, countering that, Mr Humberg said Brazil’s supply chain was not functioning efficiently, causing massive backlogs at port.

He told stories of traffic snarls snaking back 100 kilometres from port as trucks attempted to deliver grain to ports and boats queued up at sea for 14km.

Although the Black Sea nations are currently in crisis, James Dunsterville, AgFlow, said overall Black Sea exports were rising as Russia and the Ukraine in particular became more sophisticated with their supply chain.

“Rail and road infrastructure is very poor, but it is not too bad in terms of exporting grain.”

In North America, Wes Uhlmeyer, export trading manager with ADM, said this year’s US crop was looking reasonable.

He said his organisation was predicting a swing into soybeans following corn-on-corn rotations, but said if the weather was good, there would not be markedly lower corn production.

Mr Uhlmeyer said some area coming out of the US Government’s conservation reserve program meant more acres could be planted.

In Canada, he said grain industry leaders were working to correct the supply chain meltdown that was causing lengthy delays out of Pacific ports which service Asia.

“It was a perfect storm in Canada this year, a big production year and horrible weather," Mr Uhlmeyer said.

“It has not been good, but I think it will fix itself a lot quicker than Brasil.”

Mr Dunsterville threw up another potential exporting area from left-field.

“China has invested a lot in Africa, the biggest single investor in Africa in the last 100 years.”

He said it would take some time before it would make sense on a purely commercial stage to export from Africa, but said China had different investment priorities, such as food security.

Nations like South Africa and Zimbabwe have suitable land for large scale corn production, he said, while other untapped nations with good arable land include Uganda, which has recently resolved its civil war.

“The Japanese used to love Zimbabwean corn, so it can be done, but as we saw in Ukraine, it can take a long time to get things running smoothly again.”

However, Mr Dunsterville said China understood that with continued expansion of demand, new sources would have to be found and Africa could play a role in the long-term.

Gregor Heard

Gregor Heard

is the national grains writer for Fairfax Agricultural Media
Date: Newest first | Oldest first


Jock Munro
21/03/2014 4:57:27 AM

The signs are ominous for our wheat industry-we had it 'nailed' with our national pool single desk and we could take on anybody. Now we are watching the mega merchants trash our quality reputation and sell our wheat for less than what its worth as they compete against each other for sales.. How could a wheat growing nation like Australia forfeit control of its wheat crop.? The politicians and farm leaders that let us down should hang their heads in shame.
21/03/2014 5:52:58 AM

Well said Jock. What goes around comes around. Future generations will see, as our lot saw the John Darlings of the world many years ago screw the cockies and the AWB emerge as the envy of the world only to watch it fail because of human complacency.
21/03/2014 7:01:44 AM

Chicago Futures Dec $7.21/bu Aussie Dollar Dec 88.75c So 7.21 x 36.74 = US$264.89 In AUD = 264.89 / 0.8875 A$298.50 In WA you could have sold APW wheat for A$325/t yesterday so the 'mega merchants' are giving us nearly $30/t more than they need to. That is called basis Jock and that my firend is suggesting you are nothing more than a fearmongering conspiracy theorist. You cannot argue with facts. Case closed.
21/03/2014 7:56:31 AM

d8, wait till America's contemptuous treatment of Russia by congress breaking for a week returns. the east will not go away. this may be a slow road or fast who knows, but one thing for sure people won't need pieces of paper with us presidents on them. Look to the past to prepare for the future, fiat money is nothing, can u eat it? in past timeso verseas conflicts involving countries as big as Russia have brought about monumental changes to commodity values (as they have real value). so lets see the course and at what speed the oligarchs steer this ship.
21/03/2014 8:24:15 AM

Relax people....double cropping has vey limited sustainability. Typical of corporate exploitation take and move on. It is inevitable that a single desk and regulation will return....has anybody stopped to think why it was as it was. i.e. apart from those that have very short sighted, inward focused vision? and droughts/famines/wars have happened in a lot of countries and affected a lot of others. Computer chips might be crunchy but you can't feed people on technology.
Steve Dalby
21/03/2014 8:27:17 AM

dribble ... in the meantime you take the higher prices off the table because nobody ever went broke taking high prices
Jeremy Lomman
21/03/2014 8:38:57 AM

The face of Australian grain and it's growers has been lost. But we are trying to resolve this and such other issues with the launch of BIG PICTURE GRAIN. http://bigpicturegrain.com.au/ Global Topics. Future Trends. Totally Free.
Jock Munro
21/03/2014 11:28:10 AM

Well written Dee 8-of course the AWB would have been locking a certain proportion of the crop in now with no or very little risk to the grower. AWB Ltd were masters of the hedging game-so good in fact that Chicago set a limit on them. I believe that a former Chair of AWB I from Central West NSW allowed our seat at Chicago to be sold. Finally Dee how much money would the merchants be pocketing on the rising price of wheat which once would have come back to growers through their net pool returns? What is this costing our Nation? The tax could have helped to pay off our debt.
Zero till
21/03/2014 4:53:22 PM

You can get over $350/ t central nsw for asw in the domestic market. Jock do you still grow wheat now that wheat prices are so low and grain growing according to you is stuffed?
Jock Munro
24/03/2014 7:45:47 AM

Zero Till, most of the growers have sold their wheat and the high prices are meaningless. Under the single desk all growers had an opportunity to capture a rise in prices in their net pool returns. I did not say that the wheat industry is 'stuffed'.I am merely indicating that there are ominous signs that will haunt us in the future.
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