ALTHOUGH rising grain prices have seen values for feed barley soaring to $400 a tonne delivered to the Darling Downs, concerns about the season ahead mean it may not be enough to attract those holding old crop stocks to sell.
The flurry of demand from northern NSW and southern Queensland has seen grain moving from thousands of kilometres away.
Victorian and South Australian grain is moving to the Darling Downs, while there are reports of grain from SA’s Mid North heading to Moree in northern NSW.
The price spike also means intra-continental ship freight is price competitive.
There have already been several loads of feed barley moving from SA to Queensland and the industry is now talking seriously about shipments from WA.
However, given the hefty freight component, Victorian and South Australian upcountry prices are much more modest, clocking in at a shade over $300/t for most old crop cereals.
“It’s a good price but that price comes back a fair bit when you’re talking Victoria or South Australia where most of the remaining grain is held,” said Grain Producers Australia chairman Andrew Weidemann.
He said the current prices were unlikely to see farmers holding grain selling until more is known about the season.
“We’re all waiting to see what happens through the winter, if there is more rain it will dampen the fears of a big drought, but if stays dry grain will become even more valuable,” Mr Weidemann said.
He said drought hedging had already begun.
“At present, mixed farmers would want to ensure they have adequate supplies for their own livestock first and foremost, realizing there won’t be any feed for at least the winter period and possibly longer.”
He said farmers without livestock would have satisfied the cost of planting for the upcoming season so would be in no hurry to sell off remaining reserves.
“Whether it’s the right decision or not people generally don’t sell a lot of grain while it continues to rise quite quickly so I think anyone who has held grain back this long will keep doing so for a while yet.”
In South Australia, Eyre Peninsula farmer Mark Modra said most farmers in his area were export focused with their marketing programs and so had not made plans around supplying the domestic market.
However, he said with intra-continental shipments there may be a chance for those holding grain to take advantage of the high prices in northern Australia.
Mr Weidemann said the possibility of the drought premium currently in place in northern NSW and Queensland spreading was realistic but added there would be a tipping point where it was no longer worthwhile for end users to buy grain.
“You’ve got to factor in freight costs from places such as South Australia and Victoria as the demand is generally from that northern zone – the demand may be there but unless more emerges from areas with more favourable freight it does not necessarily translate to big price gains.”
David Jochinke, Victorian Farmers Federation (VFF) president said farmers with on-farm storage were comfortable holding onto grain for now.
“What happens from here very much depends on the weather.”