Elders : Cropping update – February 2023

In this month's edition of the Elders Cropping Update, we cover off on a harvest wrap from around the country as well as considerations to make for spraying prior to the next Winter crop, plus we cover summer crop progress and a range of horticulture crops in the North and South of the country.

While the experts at Clear Grain Exchange provide detailed analysis on the latest price spreads and offer their advice on achieving the highest possible price in multigrade contracts.

At a national level, the 2022-23 Winter crop will mark the third consecutive year of record grain production driven by wheat production which is tipped to reach a record 37 million tonnes according to a recent USDA forecast. The growth in production coincides with strong prices, with wheat and barley prices above this time last year for most ports.

Growers actively managing grain sales

Nathan Cattle from Clear Grain Exchange shares his thoughts on the current grain market and what's been happening on the exchange.

Australian grain markets have been very active since the last Elders Cropping Update.

The Australian harvest is mostly complete after significant weather disruptions and delays in many areas.

Despite the challenges the resulting Australian crop has been large overall, and growers have since been focused on how to sell their crop.

This includes allocating grain into forward multigrade contracts taken out in the lead up to harvest, assessing cashflow requirements, and deciding what grades to sell now and what grades they may be more comfortable to hold.

It's important to get the allocation right because it will impact the grower's bottom line.

To achieve the highest average price when allocating grades into multigrade contracts, focus on the price spreads (premiums and discounts to different grades).

Growers should then allocate higher grades to the highest premiums and lower grades to the lowest discounts.

Similar logic should be applied when considering what grades to sell now versus what grades to hold.

It is generally better to sell grades that are in demand at the time rather than grades buyers seem less interested in. This can be reflected in price spreads and applying some rational thinking.

Typically, buyers that require specific quality grain will be more active in the lead up to harvest, through harvest and shortly after harvest when supply is more readily available.

For example, a flour mill or maltster that requires specific quantities of specific grades to ensure their mills continue to operate will likely be more active in securing tonnes around harvest.

Hence as a rough rule (say 8 years in 10) you will generally see the highest premiums for better quality grades of wheat and barley achieved in the months around harvest as end users are securing a large proportion of their yearly requirements.

Feed buyers are often more willing to buy hand to mouth through the year because their quality requirements can be less specific.

The result is premiums for better grades, and discounts for lower grades, of both wheat and barley often narrow through the year.

Growers that like prices now but want to defer delivery and payment into future months such as July, are actively offering grain for sale in the July month on Clear Grain Exchange (CGX).

At the time of writing, grain trading in July on CGX was $3/t above trades of the same grade with prompt delivery in several locations around the country.

On top of this, there remains evidence of physical grain trading internationally at better values than those bid to Australian growers on an equivalent basis.

Australian grain remains in demand, growers can assess what they have and ask for a price from the market they deem is fair value for their grades, and there are options available for growers to manage their cashflow and risk.

Don't leave money on the table by getting the selling process wrong.

Set the price for your grain with Clear Grain Exchange

*Published bids refers to publicly available data from major grain buyers.

Sources: Elders Weather and Clear Grain Exchange

The information contained in this article is given for the purpose of providing general information only, and while Elders has exercised reasonable care, skill and diligence in its preparation, many factors (including environmental and seasonal) can impact its accuracy and currency. Accordingly, the information should not be relied upon under any circumstances and Elders assumes no liability for any loss consequently suffered. If you would like to speak to someone for tailored advice relating to any of the matters referred to in this article, please contact Elders.