THE BIG dry in the northern zone has led to soaring grain basis values in the Queensland and northern NSW port zones, with premiums of up to $80 to $90 a tonne for cereals above southern Australian quotes.
This discrepancy, together with a thirst for grain from northern end users, has meant grain traders are busily crunching the numbers on moving grain from South Australia and Victoria by boat to Brisbane.
“The feed grain market on the Darling Downs, in particular, will fuel cereal grain markets in the next year,” said Manildra Milling’s northern NSW grain buyer, Peter Sloan, at Gunnedah.
“Frosts, wind and warm days have sent new season yield prospects diving, so any growers with stored grain to sell in July are now bunkering down to see how far the trade will move.”
Given the depressed export wheat market was only likely to seek high quality milling grain to blend with Black Sea cargoes in markets such as Indonesia, he said domestic sales options for big volumes of stored ASW-grade wheat and barley on farm, or with bulk handlers, had taken an interesting turn.
“I think we’ll see a lot of state movement of big volumes for the feed grain market, and maybe some for milling, depending on how harvest turns out,” he said.
Tipping point looming
Industry insiders suggest the cost of boat freight from Adelaide to Brisbane would be around $80/t, but they felt business would most likely only take place when the spread in prices between the two areas reached $100/t.
Lloyd George, grains industry analyst and owner of Ag Scientia, said the rumour mill was awash with stories of business being done, but he had not heard of a confirmed booking of a ship to do an intra-continental run.
“It’s pretty close and most people are saying it is a matter of when, not if, but to my knowledge it hasn’t happened yet.”
Domestic movement of grain by boat in Australia is unusual, but not unheard of.
I’ve heard of grain being priced in from northern Victoria to Queensland via road so certainly a boat is not out of the equation
The last time it happened was in 2014 when grain moved from South Australia to Queensland.
Malcolm Bartholomaeus, Bartholomaeus Consulting, said while he had not heard of any ships being booked, grain was moving a long way into Queensland end use markets.
“I’ve heard of grain being priced in from northern Victoria to Queensland via road so certainly a boat is not out of the equation,” Mr Bartholomaeus said.
He said the industry was currently pondering just how much old crop was left and just how bad a season the northern cropping belt was likely to have in terms of providing a top-up to stocks.
“At the end of last harvest, which was massive, there were some out there saying there was enough grain out there to meet domestic demand for another year without a single tonne of new crop, but based on buying patterns it does not appear the market is so sure.”
Mr George said the time of year meant there would be shipping slots available to do business.
“There is likely to be the space at port to get the ship loaded, so it is the time of year such deals could get through.”
Mr George said he felt buyers in the north would warm to the idea.
Sorghum interest lifts
“On the balance of things, given the season they are currently having, grain availability is likely to get worse before it gets better.”
Manildra’s Mr Sloan believed there was still “a lot of good quality grain sitting in storage”, but he felt it was mostly held by a relatively small number of growers.
The only mitigating factor in the rising domestic market is a potential big summer crop to ease pressure on feed grain markets.
AgForce grains president, Wayne Newton, said farmers were looking closely at planting sorghum should the conditions turn favourable.
“The price signals are actually alright after a poor couple of years, the key will be getting the moisture for people to be able to plant with confidence.”