REWARDS for producing high protein crops are likely to be one of few positives for croppers heading into the 2016 harvest.
This was one of the key messages from Market Check domestic markets and pools manager Nick Crundall, who was a guest speaker at a pre-harvest seminar held at Cleve last week.
The seminars were run across SA by Market Check, in conjunction with FREE Eyre.
“We all know the world has got a heap of wheat,” he said.
“Since 2012, stocks have been going up, mainly due to the Black Sea and other regions ramping up production, and there’s not enough demand to compensate for the extra supply.
“But one positive story developing is the protein story.”
Mr Crundall said globally there was a lack of crops with high protein.
“If we can get high protein crops this season, we could be a major supplier for the market,” he said.
“We could see more support come in for exporters, particularly as there is a large percentage of feed-grade crops in Russia and Europe.
“Protein versus feed spreads are developing globally. H2 grade wheat is making about $20 to $25 a tonne more than AP, and it’s normally $5-$10/t.”
Mr Crundall said this season it was important for Australia to not only look to Asian markets, but also non-traditional customers.
“Australian exported 16 million tonnes of grain last year, and this year we’ll probably be looking at 18-20mt,” he said.
“To deal with the extra supply, we have to price into regions we haven’t had to for awhile.”
Mr Crundall said there was limited potential for barley.
“If China comes back into the market for barley, we’d see the spread between wheat and barley narrow,” he said.
“But if we don’t, the upside for barley is limited.
“Without China, we have to go to Saudi Arabia.
“In China we have a freight and quality advantage, but Saudi buyers aren’t bothered by quality.
“If you’re hoping for a $50/t price rise, you need to realise it would take a lot of ‘black swan’ events for it to happen.”