RELATED: NEAR RECORD CROP
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![Chris Coore, AgFarm advantage program manager, says technical issues will be critical in terms of crop pricing this harvest. Chris Coore, AgFarm advantage program manager, says technical issues will be critical in terms of crop pricing this harvest.](/images/transform/v1/crop/frm/5Q2j7ezUfQBfUJsaqK3gfB/7550af74-2175-4cae-b185-1dee9b3e370b.jpg/r0_258_5050_3108_w1200_h678_fmax.jpg)
WITH grain yields getting closer to being locked in during the lead-up to this year’s harvest the major focus for Australian growers turns to both pricing and crop quality.
ProFarmer’s Hannah Janson said international wheat futures had given up most of their gains of last week.
However, she said the good news was that they had not pushed through seasonal lows set earlier in the year.
“The market appears to have found its lows, which is something in this year of low pricing.”
AgFarm manager Chris Coore agreed.
“Fundamentally, I think we have found the seasonal low.”
Ms Janson said there was likely to be value for high protein wheat with scant stocks internationally.
However, she said it may also be hard to find hard wheat here in Australia.
“At face value, with the wet year and big crops there is probably not likely to be a lot of high protein wheat around in Australia, but growers did put out a lot of nitrogen fertiliser and maybe that may push protein levels up in some circumstances.”
“Growers have tried to manage the quality profile where they can but we will have to see how successful it was when grain starts getting delivered.”
Mr Coore said markets were likely to be tough, especially in the feed barley category.
“Our major feed barley market, China, appears to have very comfortable stocks and the only other market capable of absorbing big tonnages of feed barley is Saudi Arabia.
“There are certainly other markets out there, but they are significantly smaller.”
Ms Janson said farmers were concerned about the prospect of a wet harvest.
“It is a big wait and see regarding harvest weather, but given the rain that has fallen on the east coast already, farmers are thinking about having issues with harvest rain.”
She said there would already be some quality downgrading due to the wet season, but said harvest rain would be the catalyst for widespread downgrading.
“We’re probably looking at a crop profile with lower protein, closer to ASW than APW but it will still be milling grain.
“If we get harvest rain we could see grain downgraded to feed.”
“That is the thing, while in terms of total production, things are reasonably well set, anything is still possible on quality, which is such a big thing this season.”
Ms Janson said the late season had created an odd market dynamic.
“The lateness has caught some buyers short, in particular domestic consumers, who had banked on new crop coming on line, but because of the slow start to the harvest period have been forced to make another purchase of old crop grain.
“It isn’t as much of a problem in the north where new crop supplies are coming on line but we are seeing it in particular in key domestic markets in western Victoria and south-east South Australia.”
Mr Coore said he expected a cagey period in terms of grain marketing over harvest.
“There have been good export sales, so the market may have to come up and pay a premium to get the grain to execute contracts.
“On the other hand, I don’t think the trade has the appetite to own 30pc of the crop without sales in the pipeline.”
He also said grower’s selling decisions would be critical in price shaping.
“Do they look to hold onto their grain in the hope of a market rally, selling just what they need for cash flow, or do they look at the high yields and think that on a gross margin basis they are getting a good return per hectare, even with a low grain price?”
“Order flow is the big unknown leading into this year’s harvest.”