Growers and agents happy to set price says Clear Grain Exchange

The CBoT March contract closed at 762 US cents/bu on December 22, 2022, compared to a close of 742 US cents/bu on January 20, 2023.

Currency markets have been more volatile over the past month with the AUD/USD exchange rate moving up from 66 to nearly 70 cents last week.

Traditionally this would reduce grain prices available to Australian growers as an appreciating Australian dollar makes our grain less competitive in global markets.

However prices of many grades around Australia have held or improved over the past month - why?

Many analysts have highlighted that global grain values have been trading above prices bid to Australian growers on an equivalent basis.

As an example, Thailand recently purchased feed wheat, reportedly from Australia, at a price of USD $340/t free on board for March delivery.

This converts back to AUD $430 FIS equivalent in Western Australia and $410 AUD track equivalent on the east coast.

Hence there has been room for grain prices that Australian growers receive to improve.

The rising exchange rate has simply reduced the difference between export values and local market prices.

Within Australia, growers and their agents have become more active in taking control of their grain prices and offering grain to market at prices they deem is fair value, rather than reacting to and hitting published cash bids.

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At time of writing more than 26,000 parcels of grain were offered for sale on Clear Grain Exchange and growing.

The parcels are made up of 98 different grades of wheat, barley, canola, sorghum, oats, and pulses across 23 bulk handling companies in all port zones around Australia.

Growers and agents are getting more comfortable setting their price rather than watching and waiting for a bid from buyers.

This creates a healthier market.

The result is traded values of many grades in many locations have improved over the past month and are often much better than advertised published bids and cash bids.

Many growers are also planning their sales and cashflow through the year with many opting to offer grain for sale in future delivery months such as July 2023.

This is creating an active market in those future months with buyers also managing cashflow and their shipping programs to tie in with when they would like to own grain.

Future delivery dates are often resulting in a win-win for sellers and buyers and can be reflected in traded prices.