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With harvest 2019 ramping up, we're facing another year of reduced national tonnes as Australia continues to experience adverse dry weather, particularly on the east coast. This means another year of servicing domestic demand with complex grain movements via a number of pathways.
This was a significant change Australia had to adapt to last year with east coast supply shortages being solved via road, rail and boat throughout 2019. Supply chains adapted and have increased in efficiency to give consumers and the trade a transparent market and clear pathway for feed grains into QLD and NSW.
These channels will continue to service demand throughout the eastern states through the 2019/20 harvest and into the New Year.
With this in mind, logistics decisions, such as delivery points, freight rates and alternate markets should play a central role in the overall grain marketing strategy of farmers this season.
Weather, time, storage and financial constraints continue to dictate decision making around points of delivery for grain during harvest.
In years past when Australia was competitive globally, it was a relatively straightforward decision to go to the local storage site feeding into the export pathway. The domestic nature of the past two seasons has meant traditional pathways and grade spreads are largely redundant.
Alternate pathways into QLD and NSW via rail are allowing premiums to be built into a select few rail loading sites in SA and VIC that have high efficiency loading and sites that can accommodate heavier train carriages.
Premiums have also been common for sites with large location differentials in SA and VIC that feed into large consumptive regions. Examples include; northern Lincoln sites feeding back into Adelaide, and eastern Adelaide sites going into VIC or NSW.
Farmers who traditionally delivered into sites closer to port are encouraged to look at sites close to local demand points and potentially look at storage networks or sites that have flexible out-loading arrangements that appeal to domestic buyers.
As always, the cost of transport plays a significant role in where you deliver grain and who you sell to post delivery. Road freight rates continue to hold relatively firm as fuel prices remain elevated and trucks are kept busy with harvest work. In the months following harvest we should see rates decline, particularly on the longer haul work as more capacity is freed up.
Delivered markets through harvest so far have been consistently offered in the trade at a discount to replacement values from bulk handling sites indicating that off the header tonnes are readily available.
Site bids have remained firm through the first few waves of cash selling however the appetite of buyers will be tested as harvest marches south into the much larger Victorian crops over the next month.
What does this mean for farmers?
As we move through harvest 2019 and into the New Year, grain movements will continue to be dictated by domestic demand points.
Due to the prolonged dry on the east coast and the increasing value of sheep and cattle, the main demand pull will continue from feedlots and mills in QLD and NSW.
Therefore, it is important to keep a close eye on the above variables, domestic freight flows and drawing arcs into key consumptive regions to ensure you can maximise the value of your grain this marketing season.
Following these flows, monitoring freight costs, location differentials and loading capacity at alternate sites as well as choosing the right time to sell post-harvest can be time consuming.
Agfarm has long standing relationships with multiple freight providers, bulk and private storage sites, and domestic consumers throughout Australia.
These relationships, combined with Agfarm Advantage Flexi and Structured, our post-harvest sales programs, can assist you to maximise your grain value into next year while providing harvest cashflow.
To speak with the team to work through marketing and financing options that best suit your business requirements over harvest and into 2020 call 1300 243 276 or visit agfarm.com.au/advantage.
This is sponsored content for Agfarm.
The story Logistics playing central role in harvest grain marketing first appeared on The Land.