THERE has been a lot of discussion recently on the significant price differences between port zones of the same quality grain.
This is on top of the fact that prices bid to Australian farmers are well below the global price of grain.
Last week we wrote that growers have more pricing power than many seem to realise.
The takeaway point was, if every grower was offering their grain for sale at stronger prices, they would very likely be receiving better values.
While growers are selling into published bids, there is no incentive for buyers to increase their bid price.
There is also no incentive for "more buyers" to start participating in purchasing grain while prices are falling lower.
Hence growers have a choice.
They can sell into the published bid or ask more from the market.
The published bid is not the market price unless you sell into it.
The market price is the traded price and as evidenced by traded values on Clear Grain Exchange (CGX), the real price is often much higher than the published bid.
The advantage of growers offering their grain for sale on an independent exchange is that it gives all buyers equal opportunity to buy it.
This is how growers can find the true value of their grain.
The chart shows the number of buyers that purchased grain on CGX last season in each port zone.
There was more than this searching grain offered for sale on the exchange but not finding what they wanted and so were not able to buy.
I expect that most growers will be surprised by the number of buyers participating in each port zone.
More than 300 buyers are registered to buy grain through CGX.
We are often asked who the buyers are - it's a broad spectrum.
Buyers include bulk exporters, container traders, importers, domestic users of food grade and feed grains - and opportunistic traders that see value in owning grain when it gets too cheap.
Buyers are based locally, in the Eastern States, and all around the world.
The point is, there are plenty of buyers that want and do buy Western Australian grain.
We just need to make it easier for them to purchase grain from growers.
This is what will help ensure the price growers receive is closer to its true value.
The way growers can do this is by offering their grain for sale on CGX.
It is the only completely independent grain exchange.
We're not a buyer, seller or adviser of grain which means there is no underlying bias or potential conflicts that could impact the market price.
Our sole focus is operating an independent and secure exchange that creates a more efficient market and ensures all parties are protected in the transaction.
Australian growers have more pricing power than they realise, particularly when the world needs Australian grain like this year.
If you offer your grain for sale on an exchange where all buyers can see it and try to buy it, it attracts more buyers to participate in your port zone.
Don't limit your grain sales and price discovery to buyers that you know.
I guarantee you there are more buyers than that willing to buy your grain.
- More information: Go to cleargrain.com.au to offer your grain at your price to all buyers on the independent and secure exchange or call 1800 000 410.
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