GRAIN shipments from Western Australia and South Australia are likely to play a major role in filling the northern Australia feed gap over coming months according to industry analysts.
Intra-continental shipments into Brisbane have been going on since November last year and will likely continue with relative frequency unless export prices climb high enough to make Darling Downs buyers uncompetitive.
Duncan Whittle, general manager of strategy and development at igrain.com.au, said he believed there was enough grain to satisfy demand this year from SA and WA but said next year may see grain consumers make hard decisions.
“With the current season shaping up the way it is and the lack of carryover stocks things could get very tight.”
However, Peter McBride, corporate affairs manager at Cargill, said while crop prospects for the 2018-19 crop were poor through much of the east coast they were currently reasonable in South and Western Australia
“Currently we are seeing a steady trade of SA and WA feed grain moving into Queensland and northern NSW,” Mr McBride said.
“With reasonable forecasts for both SA and WA wheat crops this harvest we expect this flow will continue into Queensland and NSW.”
Mr Whittle said presently Brisbane was the hub of the intra-continental grain trade.
“The sums work in loading rail cars to move from Brisbane back to the Darling Downs, but it does not add up out of Newcastle,” Mr Whittle said.
“The cost of moving grain inland out of Newcastle is higher, a lot of that is to do with the topography, going uphill.
“Further to that, most of the demand is either in the Brisbane port zone or in the far north of the Newcastle zone where accessing grain ex-Brisbane still works so I think those bringing in grain to that northern region will continue to use Brisbane.”
Mr Whittle said there was no reason for the demand for southern and western grain to abate over the coming months.
“I can’t see any reason for it to slow down, even if we were lucky enough to get rain it will take a few months before that generates any feed.
“I would say people will keep buying old crop then snap up any new crop that is around as soon as it hits the market.”
Malcolm Bartholomaeus, Bartholomaeus Consulting, said the current situation was acceptable for northern end users at present but added that dynamic could change should the export market kick up.
“We’ve seen a lift in US futures and if that lift in international prices is sustained and that competition comes for the WA and SA grain and prices there go up then that may make it harder for those looking to bring grain to northern Australia.”
“At present the lower priced WA and SA grain is keeping a cap on northern Australian prices, being the WA price plus the freight, but price rises in either WA and SA will result in higher prices on the Downs.”
Mr Bartholomaeus said grain was making its way from SA to Queensland and northern NSW both by sea and overland.
“You can move grain by train from places like Mallala and Crystal Brook in South Australia all the way up to Queensland if you want,“ Mr Bartholomaeus said.”
He said unlike other drought years, grain consumers did not have the luxury this season of low world prices to keep domestic basis in check.
“Looking for example to 2003, the last time wheat was imported to Australia, there was no wheat here but a large volume of cheap feed wheat elsewhere, that does not look like being the case this year.”