Rushing to get grain exports out the door is a good problem to have

Aboard the ride of higher demand for grain abroad

As growers get busy with grain marketing, it is likely there will be continued price volatility - but global demand signals are strong.

As growers get busy with grain marketing, it is likely there will be continued price volatility - but global demand signals are strong.


COMMENT: Marketing grain will be impacted by price volatility, but demand signals are strong.



With a monster east coast harvest done and dusted, grain in the bin and the Christmas holiday period behind us, growers will likely start looking at marketing the next chunk of their crop.

For those who have missed the recent commodity market news, expect to see some volatility hitting our markets that could linger for some time.

In addition to a US Department of Agriculture (USDA) report revealing plenty of bullish stories about corn and soybean carry-outs, we have seen Russia introduce an export tax and make noise about another in the pipeline.

With food inflation posing a problem for Russian citizens, the Russian government decided it needed to intervene and address the situation.

What followed was an export tax on multiple agricultural products - in the expectation that domestic customers can win a bigger share of business, instead of export customers.

The hope is with a large amount of agricultural products' pricing more domestic, that this can negate the food inflation issues.

The Russian export tax announcement was quickly followed by a bullish USDA report that resulted in world commodity values, including for wheat, barley and canola, continuing to rise.

This increase in world cash values has not helped Russia's food inflation issues and, because of this, there is talk of doubling the current export tax.

Nothing has yet been confirmed. But if this happened, growers could expect more price volatility in the market and - with that - more opportunities in the coming months.

After three big months of harvest-focused activity, attention has well and truly turned to executing grain to Australia's international customers.

While all the news has been very bullish about agricultural products worldwide of late, having an efficient supply chain is required to allow exporters and growers to take advantage of these opportunities.

The physical ability of our infrastructure to handle an Australian crop of such scale could well be what dampens domestic grain values, while international values appreciate.

Export slots in the east coast are being booked-up, as is train and road capacity, and current pricing at port compared to up-country is highlighting where the strongest demand is coming from.

In the second half of the year, Australia will be competing with big Northern Hemisphere exporting nations - each of which will be trying to take advantage of the strong global market.

With the three tough years experienced on the east coast prior to this harvest, the export channels have been dead quiet.

In some ports, the supply chains have been completely reversed to import grain from other parts of Australia and - in some cases - from other countries.

The market is doing what it needs to at this time to get as much grain as possible exported from the east coast prior to the Northern Hemisphere harvest.

Fingers crossed that the east coast can manage another decent year in 2021, and in 12 months' time we're again rushing to get exports out the door - which, all would agree, is a great problem to have.


From the front page

Sponsored by