One of the management tasks is to maximise the average price achieved for the crop grown in any one year.
The time slots available include the pre-harvest market, the harvest market and the post-harvest market.
The marketing tools available are much broader than that, including the use of swaps, options, futures, and fixed price contracts in the forward market, through to simple cash sales off the header.
Post-harvest we have warehousing or utilising on-farm storage.
Some growers use swaps and options in their post-harvest marketing as well.
Some growers maximise their returns by seeking out direct sales to end users to minimise freight costs and avoid expensive storage options, or deliver direct in the post-harvest market to maximise returns for on-farm storage.
In terms of the 2022-23 crop we are about to plant, maybe the "game" will be to not only maximise the average price, but to see whether some of the crop can be priced at the elusive $500 a tonne level on a delivered export port basis.
To get to $500/t delivered port, we need the support of strong export values.
The global market ultimately sets our wheat price, even in drought years.
If the global market drops away, we won't achieve $500/t unless drought allows a big enough premium to be added to that global price.
December futures are our best barometer of global wheat prices for the upcoming crop.
So far, after the Russian invasion of Ukraine, December futures have traded above $500/t for five days.
The peak daily closing price was A$526.58/t on March 8.
Realistically, the most likely way to convert such a strong futures price into a physical price of $500/t at harvest will have been to sell December wheat swaps at $520/t or higher.
There will be two ways to convert such a swap into a $500/t physical Australian Premium White price.
One will be to hold the swap to expiry, and if basis is no worse than -$20/t, the outcome will be $500/t.
The other way is to buy the swap back early whenever a reasonable profit is available.
Already some swaps will be holding $20 to $40/t profits.
If the market falls further, and profits of $50 to $100 can be captured, then the final cash prices to add to those profits only have to be $450 down to $400 to achieve a final return of $500.
For those who know how to use the forward marketing tools, and have possibly already acted, the chance of achieving $500/t for at least part of the 2022-23 crop is already very high.
