RESEARCH investment into the global grain market has helped to develop WA’s relationship with the Black Sea market according to CBH planning, strategy and development general manager Ben Macnamara.
Mr Macnamara said CBH had invested a lot of research time into the market, including demand, supply and key international and domestic competitors.
“We have focused mainly on wheat and looked at the global exporters of wheat, finding obviously the key thing is the increase in production from the Black Sea,” Mr Macnamara said.
“In 2008 to now we have seen a 40 million tonne increase in exports out of the Black Sea and if we look at a forward estimate, we are looking at that growth to slightly slow but still increasing by another 30mt in the next 10 years.”
Mr Macnamara said with 750mt of wheat grown around the world, Australia accounted for about four per cent of global production.
Although it is only a small amount of the overall total, he said the demand was a positive story.
“It’s focused on the rising middle-class and population growth,” he said.
“In the past 10 years we have seen a 27mt increase in demand which has been met by the production side.
“We should see it continue with the growth of urbanisation.”
With long-term wheat import demand remaining strong and South East Asia as a critical market, Mr Macnamara said Australia, particularly WA, was well-placed to capture the growth, but so too was the Black Sea.
“Cost competitiveness throughout the supply chain and improving production is critical for our WA farmers to compete,” he said.
“Supply from the Black Sea has increased rapidly over the past few years and WA needs to continue to improve its cost position to remain competitive and bring down production costs as much as possible.
“Long-term oversupply could result in grower price and margin pressure.”
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Mr Macnamara said wheat as a percentage of the total crop in WA was declining.
Last year 55 per cent of the State’s grain was wheat which was the lowest it had been in the past 10 years.
Barley plantings are continuing to expand with growers chasing higher yields and better gross margins.
With the Black Sea tending to favour wheat and corn from a gross margin perspective, WA’s increased barley production remains strong in the global market.
“If we were to look at barley, we would see about 145mt of barley grown world wide and we are at about 20 per cent,” Mr Macnamara said.
“We are seeing growth from the barley perspective, but most of it is focused on feed grains.
“Feed grains are really driving the increasing demand with the rising consumption of meat.”
Mr Macnamara said the market should see a continuing increase in barley production with gross margin factors as well as Black Sea pressure on the global wheat market and growing demand for feed grains.
