BARLEY growers in south-eastern Australian may well have the best production year for some time, but will need to rely on the extra tonnage to generate additional revenue, with a price spike unlikely from here on in, according to a panel of grain marketers addressing a Victorian Farmers Federation (VFF) marketing seminar in Tungamah, north-east Victoria.
The flood of feed grain across the world is acting as an anchor on prices, with Australian production looking relatively assured, there is little likelihood of a basis-inspired price rally due to concerns about supplies.
Even in the eastern states, where domestic markets over recent years have delivered a basis premium, are likely to have an exportable surplus this season.
The best growers can hope for is to monitor the market closely and perhaps generate some small premiums when buyers are actively in the market trying to shore up a set tonnage of grain for their use.
Brad Knight, Agfarm Horsham, said there were good forward contracting opportunities earlier in the season, but acknowledged many farmers were reticent to lock in tonnage due to issues with production failure in recent seasons.
Fellow Agfarm Horsham representative Sam Heagney said that commodities such as feed barley were likely to run at close to export parity for the most part, especially with the dairy market depressed.
However, he said there could be small opportunities for those freight advantaged to key dairy areas to exceed the port price by a freight component, a situation that will apply to farmers in the north-east, adjacent to Victoria’s Goulburn Valley dairy area.
Currently, Mr Heagney said parity rates into the key Saudi Arabian market had feed barley in the low $140s/t port.
The ABB contract price on Monday was $145/t Geelong.
Mr Knight said a rough trade estimate was for at least 1.1 million tonnes of feed barley from Victoria.
However, he said aside from the dairy industry, there would be a few feed users filling the gap, with the pig industry healthier than this time last year, and feedlots also maintaining production.
Currently, the malt/feed barley spread situation is at around $15-20/t, but Mr Knight said this may come in somewhat if more barley makes malt, given limited demand for malt barley through the key Asian market.
Danny Verbeek, Elders Toepfer Grain accumulation manager, said logistical issues out of other ports may force short-term shorts in the malt market, which may provide a spike in price should a customer need to get hands on supplies immediately.
"If, for instance, there is an issue with the WA ports, then perhaps a customer out of Asia needing supply quickly may look to the east coast and pay a small premium," he said.
"Other than that, there is about 850,000 tonnes of malt barley needed to meet domestic demand, and once that is supplied we will be trading off export parity in the malt market."
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