Grain harvest challenge

Best grain harvest in years brings price risk

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Savvy growers are already taking steps to minimise price falls at harvest

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Bill Arnold and daughter-in-law Ella Arnold, Moora Park, Jerilderie. The Arnolds (pictured on our cover) have just put in four 1300 tonne silos to increase their options during this season's harvest. Photo: Olivia Calver

Bill Arnold and daughter-in-law Ella Arnold, Moora Park, Jerilderie. The Arnolds (pictured on our cover) have just put in four 1300 tonne silos to increase their options during this season's harvest. Photo: Olivia Calver

The biggest grain crop since 2016 is taking shape, with confidence building on the back of recent rains, but there is growing concern that price at harvest will flounder under the weight of receivals.

Right now last year's grain is selling to a sharp downward trend week on week and yet there remain plenty of growers seeking to offload supplies.

Meanwhile, traders say the season's first barley will come off a western block next week, forward sold six weeks ago for $220 a tonne. This week some buyers have quoted below $200/t.

NSW Department of Primary Industries technical specialist grain services Peter Matthews said this winter's crop forecast puts the cereal area at five million hectares.

"If we continue to see above average rainfall across the state through September and into early October, crop yields are on track to be well above average," he said.

"For growers with long memories wheat production could exceed the 2010 season when over 10 million tonnes of wheat was produced in NSW."

Senior account manager with igrain, Machallie McCormack, said growers in the Riverina were looking at five tonnes a hectare for wheat, 7t/ha for barley and 2t/ha for canola.

Growers in the north have hoped for 2t/ha for wheat, but that could likely more than double if rains continue to fall during the next four to six weeks.

"These numbers leave little doubt that the eastern seaboard is looking forward to a big export year, relative to the past few years," Ms McCormack said. "The only grey areas are the recent La Nina prediction from the Bureau of Meteorology, and risks of late frosts."

Growers keen on cashflow are in the majority and as a result a significant portion of grain will go into the warehouse system at harvest, through receival sites with the quickest turnaround, and growers such as Damien Doyle at Euabalong, north of Lake Cargillego, are worried local roads will be punished as a result.

With Graincorp assets run down to the point that rail freight is compromised, he said growers such as himself will be tempted to truck B-triples, hauling 60t at a time, 130 kilometres to Wyalong to net better prices. Other growers plan to truck product direct to port.

"This year it is possible that we will have never seen so much grain. It will be pay back time for what we have spent in the drought. But the road and rail network will crumple," he said.

"A lot of receivals don't operate to capacity; the railways can't handle the weight and the cost of that inability is passed onto the producer."

Ms McCormack predicted growers in the south could be price takers if the harvest kicks off earlier in the Central West and the north - a big change compared to recent years.

"Growers are combating this by looking at capitalising on forward contract prices now, and forward selling cash flow requirements," she said.

Charles Brett, Kirribilli at Bullarah, west of Moree, stepped up forward sales of barley from December and January.

"The predictions were for a wet spring and the possibility of a lot of sorghum going in - with that grain competing with barley as feed," he said.

Mr Brett locked in some of his predicted tonnage before the Australian dollar rose and ahead of China's decision to pull the pin on barley.

To date he had forward sold 25 per cent of a theoretical 4t/ha wheat crop at a price that he was comfortable with, but there remained plenty of grain that would be exposed to volatile harvest prices.

"There's lots of risk we can manage for, but political risk is not one of them."

On farm storage is key to managing price fluctuation and a record volume has already been installed up and down the eastern seaboard since the last good harvest in 2016, but Durum wheat grower Doug Cush, Bellatta, said more was required.

After the 1982 drought the season broke with good rains that turned into too much and by the time the 1983 crop was ready for harvest, the rains arrived in earnest and wheat was shot and sprung, suitable only for stock feed. That scenario could well be repeated this year.

In 1984 Mr Cush bought a grain dryer, so that he would be able to harvest grain at 15pc moisture, bringing it down to delivery specification of 12.5pc on-farm. In fact it wasn't needed that year. "I'd like to see farmers be a bit more professional and accumulate by grade," he said.

On farm storage in high demand

Proof that farmers are taking control of their destiny has never shown a clearer face with Andrew Kotzur of silo manufacturing company, Kotzur saying this year their orders had almost tripled.

"The interest in on-farm storage has been unprecedented," Mr Kotzur said.

Mr Kotzur said with a La Nina now predicted, conversations with growers had turned to how they will use on-farm storage to help manage a potentially wet harvest.

"I was speaking to farmers last week about what they do if they get a lot of feed wheat because it's been downgraded due to the weather," Mr Kotzur said.

"There's certainly sentiment around that the feed grains are going to be fairly depressed in price and they might need to be stored to get some upside. If you were to deliver grain to the central system or to an end-user, you can't deliver over-moisture grain, but if you have on-farm storage, you can harvest it and dry it out or blend it later, there's a few options there," he said.

The Arnold family of Moora Park, Jerilderie have just put in four 1300 tonne Kotzur silos.

Bill Arnold said they had been thinking about building more storage for a while and fortunately decided to bite the bullet this year.

"I don't know if it's good management or good luck but the way the season's gone they'll be plenty of grain around," Mr Arnold said.

"Kotzur had a tough time putting the silos up with the wet weather, they did a really great job under trying circumstances."

He said they usually took their grain into Emerald Grain or GrainCorp at Tocumwal.

"You don't know how congested it will be down there (at harvest), staff might be a problem due to COVID-19, but the prices that might also be a problem," Mr Arnold said.

"We'll look to cash the canola, you can't argue about its price, so it will probably be mainly barley and wheat which we store."

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