Grain sales impasse

06 May, 2016 02:00 AM
Sluggish export programs have kept a lid on grain sales over the past couple of months.
Sluggish export programs have kept a lid on grain sales over the past couple of months.

THE AUSTRALIAN grain industry is in the midst of one of its slowest sales period in years, with growers unwilling to sell remaining unpriced grain at current values.

Slow export sales, reflected on shipping stems at ports across the country and sluggish demand from domestic markets has meant little grain is changing hands at present, in spite of there still being reasonable tonnes of the old crop to be sold.

Dan Cooper, chairman of the NSW Farmers Association grains committee, described the situation as a ‘Mexican standoff’.

“There’s a fair bit of unpriced grain, but farmers are unwilling to sell at current values and marketers are unwilling to raise their bids,” he said.

“It’s now just a matter of seeing who blinks first.”

Mr Cooper said Australia’s grain prices at present were largely uncompetitive on the international stage, with a strong basis meaning values are above worldwide parity.

“We’re basically priced out of the export market, so that means we are relying on the domestic market to take the majority of the remaining old crop.”

Grain Producers Australia (GPA) chairman Andrew Weidemann agreed that farmers were holding tight to remaining stocks.

“Nobody is keen on selling on the price, so people are waiting for some sort of a price rally.”

However, he said he did not think there was a lot of grain remaining to be sold.

“There might be some grain still on-farms, but I would say that is often committed to farmers’ own livestock needs, and I don’t necessarily think there’s a lot in the bulk system, at least here in Victoria.”

Lloyd George, analyst and owner of AgScientia, said grain exports were slow, even out of the export dominant states, South Australia and Western Australia.

“Even when there are some sales, they are generally to the locations we have strong freight advantages, we are struggling to get much reach.”

Mr George said the container trade was accounting for some grain, but had slowed down rapidly.

“There is still some value adding in the container trade, but it is quiet.”

He agreed farmers were not willing sellers at present values.

“Without a true break as yet through the east coast, some farmers are thinking if they have held their grain this long they may hold on a little longer as a drought hedge or to market if there is rain, but it comes too late to stimulate late autumn / early winter feed.”

Mr George said farmers were having more trouble moving winter crop because northern markets have more access to sorghum than in recent years.

“That fierce demand from China that has characterised the past couple of seasons just isn’t there.”

In South Australia, Grain Producers South Australia (GPSA) chief executive Darren Arney said there was more unsold grain than at this time last year.

“Some guys have needed to make sales for cash flow reasons, but if not, they don’t like the low prices and are waiting for a rise in the market.”

Gregor Heard

Gregor Heard

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


Jock Munro
6/05/2016 2:32:28 AM

This so called 'Mexican standoff' is all that we could expect in a deregulated market place that is run by merchants and not by a single seller as we once had via the single desk national pooling arrangement. Unfortunately it could well get a lot worse in a huge production year with the same global high stocks position . What Daniel Cooper (and his colleagues who supported deregulation)will learn the hard way, is that merchants do not make the price and they will sit on the fence until the grower is eventually forced to sell.
6/05/2016 4:35:00 AM

I listened to Malcolm Turnbull saying farmers were getting fantastic prices for their produce and how great things were two days ago. I'm sure as a banker he would understand the concept of real prices, those adjusted for inflation. My land values have averaged 22% rise for the last 16 years, has my wheat, canola, lamb, wool, beef done the same? We dont have the luxury of wages indexed to inflation, but its crazy for politicians to rave about the succes of FTAs and all other trade control measures as having a good effect on us when no body undertakes due diligence to see the cost/benefits.
6/05/2016 6:25:37 AM

considering such significant factors for our farm analysis are collected as surveys (eg ABARES), even though the tax office would have these figures available, could the hypothesis be that these are deliberately unreliable figures, so that the true picture is not fully understood?
Philip Downie
10/05/2016 6:17:39 AM

Well you would have to say the dairy industry isn't going so well Malcolm, but this is just another example of the farmer taking the pain whilst the processors get off scott free. Has happened for years with beef until recently and now grain.
NSW farmer
11/05/2016 9:45:13 AM

Does Andrew Weidemann ever leave VIC. Always seems out of touch with the entire market.


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