Strong returns build niche interest

Southern Australia Durum Growers Association chairman Mark Hill said the world durum price had gone through the roof on the back of production issues and it was now about $600 a tonne.

With the new durum variety Aurora offering yield and quality improvements, demand for seed was very strong.

"I know people are looking very closely at durum for next season," Mr Hill said.

"Sales of Aurora seed have been very strong and if people don't secure supplies in the next fortnight they will miss out."

Mr Hill said about 60 per cent of the durum tonnages produced this year had been committed under contract earlier this season.

He was pleased with how the durum harvest had gone on his property at Tarlee.

"It's been a very pleasant surprise, most has gone DR1 or DR2 and with low screenings," he said.

Grain prices are being boosted by overseas factors, according to Rabobank's latest agribusiness report, with the slowest US corn harvest underway since 2009.

The lack of early season grower selling in the US had lead to a 9pc price rally in the past month.

There were also northern hemisphere weather concerns, particularly in the Black Sea region, where conditions were cooler and drier than the ideal.

In Australia, yields for all winter crops continue to be revised lower due to dry conditions in the third quarter, so basis levels at export orientated port zones remain at historically high levels.

Despite the plentiful supply of global feed grains, barley prices are continuing to firm for growers.

ADM SA accumulation manager Ben Noll said barley had traded "as a virtual island" compared to wheat and oilseed markets in the second half of the growing season.

Mr Noll said malt premiums in SA were likely to remain firm, ranging from $20-30 per tonne for Hindmarsh and $40-50/t for more sought-after varieties like Commander, Gairdner, Baudin and Buloke over the base barley grade, F1.

"While the market may tighten on the east coast, crop prospects appear reasonably good in WA and SA," he said.

ADM and its former Toepfer business are one of Australia's major barley exporters, supplying feed barley to Middle East buyers and a combination of malt and feed grades to Asian customers.

Early estimations of the faba bean crop in southern Australia suggest that the average yield across the growing regions will be down 50pc.

After last year's success the sown area increased 15-20pc this year but a combination of hard frosts and a hot, dry finish has affected crops across the region.

GrainCorp's head trader for pulses Nick Poutney said the smaller crop in Australia was supportive of local values because the main importer, Egypt, has already sourced a significant proportion of their requirements for this year from the UK and France, which have both had more product than usual to export.

"If Australia also had a large crop this year we may have suffered a price slump due to an oversupply of the market," he said.

"As it is the high prices of $430 plus per tonne are likely to stay firm as the harvest comes to a close."

* Full report in Stock Journal, November 27, 2014 issue.