IN A repeat of the past season’s price action, harvest is providing most growers with strong prices for at least some of their crops, allowing for favourable early pricing opportunities.
It is a far cry from the old adage of prices dropping quickly at harvest, as growers sell-off the header and are essentially price-takers, as cash flow requirements force sales.
In general, growers are becoming more sophisticated with the management of their grain marketing. Whereas you could once expect harvest pressure to unfold, the grain marketing season has become significantly longer in today’s market as many growers are open to pricing grain throughout the full calendar year, in line with their personal risk strategy.
There is also a clear trend of holding more grain, post-harvest. Production certainty will often set the tone about the strategies to be adopted but forward sales are becoming much more common, either via physical or swaps.
The past two harvests have seen the APW1 contract trading above $280 a tonne, and one of either barley or canola providing strong prices for early sales ‘off the header’. Last season, we saw canola - as is often the case – a reasonable sell at harvest, to generate early cash flow. At around 400,000t, the crop is small, early export slots need coverage and the nature of world growing seasons usually permit reasonably good harvest prices.
This season we are seeing the remnants of a large Canadian crop from last season that has slowly made its way on to the market, pressuring world oilseed markets along with a large, expected new crop.
Canola growers are currently caught in a position of not wanting to sell too much at the current price but mindful of the dangers that can arise from holding into the second half of the year, when shipping slots for canola are reduced and demand can be minimal.
Barley has been a beacon for growers this season, with feed prices up to $50/t higher than at the same time last season and malt spreads beginning to widen. It is unfortunate that relatively poor pricing in the past two seasons caused a rotation out of planted barley hectares into wheat and canola, however there is still more than enough barley planted across the state to ensure that revenues from the cereal are robust.
With favourable prices and the introduction of the much-anticipated Compass variety next season, it will be interesting to see if there is a move back into barley in 2015-16.
Wheat prices remain steady and at a similar price to last harvest, providing growers with adequate opportunity to make sales at profitable levels. Barley has been getting more attention from growers in recent months, rallying significantly.
At Agfarm, we have seen a big move towards our shorter, Advantage Harvest program. This is partly explained by the strong success it had in its first year, last season, with prices rising throughout harvest, providing good returns, and growers receiving payment in three days when they most needed it.
With strong harvest prices again available to growers, we would expect to see the proportion of grain in Advantage Harvest increase, particularly barley, which is trading around decile 9 at the moment.
Details: Matt Qinn or Bec Roberts, Agfarm, 1300 243 276.
