MARKET headwinds for WA grains have resulted in slowed progress through local ports for the first three months of this year.
The reduction in grain shipments from WA ports is demonstrated by shipping movements at Bunbury port which services Bunge Australia’s 50,000 tonne port terminal, 160,000t bunker receival site at Arthur River and 120,000t site at Kukerin.
Shipping movements listed on the Bunbury Port Authority website show only one ship has been loaded with grain in 2018.
According to the website, the only grain ship loaded at Bunbury so far was Moonbright from January 17-20 with just under 34,000t destined for Japan.
In the first three months of last year, five ships loaded at berth three Bunbury with a total of almost 122,000t destined for Europe, Japan, India, Indonesia and Vietnam.
But demand does appear to be improving in the short-term with two ships booked into Bunbury to be loaded over the next three weeks.
Bunge WA regional manager Christopher Tyson confirmed Bunge had booked in a canola and a wheat ship to be loaded.
As well, Bunge has continued to execute sales using the CBH Group’s WA facilities at Kwinana, Esperance and Albany ports, along with Viterra’s facilities in South Australia, Mr Tyson said.
CBH’s port capacity listing up to March 15 showed “spare” tonnage capacity at its Kwinana port facility in the second half of January and first half of February exceeded the tonnage that was allocated.
In the first half of February 76,000t of capacity at CBH’s Kwinana grain terminal was allocated with 286,500t “spare”, according to the capacity listing.
The grain terminal at Geraldton port also had more spare capacity than allocated tonnage in the first half of January and second half of February, the listing showed.
CBH’s Esperance berth was shown with no spare capacity so far this year and at Albany there was limited spare capacity available in the second half of February and first half of March.
“Surrendered capacity” at CBH’s Kwinana port terminal so far this season has totalled 578,000t with 27,000t not reallocated.
Mr Tyson said several factors contributed to the slow start to the year and the impact on the WA grain shipping program.
Ultimately, last year’s weather issues mid-season, coupled with aggressive pricing from the Black Sea region, saw a historically low forward book out of WA in regards to milling wheat, he said.
But Mr Tyson said the WA wheat market had also seen increased interest from the Philippines in the first quarter of 2018 which had helped demand at the lower end of the quality wheat market.
“As we move into the second quarter of 2018 we hope to see demand from South East Asia increase, as it has been historically slow to this time,” Mr Tyson said.
“(But) Black Sea exports will continue to see increased competition into this destination in the short to medium-term.”
My Tyson said barley had continued to remain strong with demand out of China for feed grade seeing good support for prices over the past two seasons.
Canola has come off its harvest highs as Australian canola found it hard to compete into the European market, he said.
The Bunge port site, which broke CBH’s grains port monopoly when it opened in 2014, and its up-country sites opened in 2015, are holding plentiful stocks, he confirmed, with good support from growers.
Some growers, Mr Tyson said, were holding contracted grain on farm and Bunge was working with them to match their grain stored on farm to coming shipments.
CBH has not released its comparative shipping tonnage figures for this year so far, but during presentations to recent industry functions its representatives have indicated its program is running significantly behind what had been expected.
Some industry sources estimate CBH will end the first quarter this year, holding up to four million tonnes of grain more, because of the slow start, than it had earlier anticipated.
While not revealing figures, CBH marketing and trading general manager Jason Craig confirmed the current reduced shipping program.
“WA’s shipping program has had a quieter start since the 2017-18 harvest compared to the previous year’s program, which was underpinned by a record crop,” Mr Craig said.
“There are numerous factors contributing to this, a smaller wheat crop last year has led to a slower shipping program for wheat for the first half of the season, and the well-publicised competition and wheat supply from the Black Sea.
“Interest and demand from our key markets, particularly Japan, Korea and South East Asia, is starting to increase as attention turns to Australian quality.
“In respect to barley we have seen a very strong shipping program as there has been good demand for both feed and malt from China, and canola has seen good demand from the EU (European Union).
“Hence there has been a strong shipping program from the Albany and Esperance ports.”
WAFarmers grains council president and Beverley grain grower Duncan Young said he believed a set of poor trading circumstances responsible for the reduced volumes of grain shipped so far, were starting to improve.
“It’s a case of swings and roundabouts, there’s a lot of grain in the world at the moment and a lot of cheap wheat coming out of places like the Black Sea,” Mr Young said.
“Historically low freight rates have also eroded our (WA’s) local freight advantage in geographically close markets that we traditionally service.”
The present low rates enabled lower cost producers to “ship grain around the world” to compete in those markets, he said.
“With that set of circumstances I think a certain reluctance to ship (WA) grain is understandable.
“But things are changing, in the last month we have already seen some increases in freight rates and they appear to be on the rise.
“There’s (globally) not a lot of high protein wheat about.
“By the middle of the year I think we might be seeing a different situation for shipments of WA wheat,” Mr Young said.
