acc piece.pdf

Weekly Grain Newsletter

15 April 2015

www.profarmer.com.au 1 Ph 1300 302 143

Click on a headline below to go direct to the Newsletter article.

International News

As more analysts come to the market with outlooks on 2015/16 season

production prospects we are slowly starting to paint a picture of the mar-

ket place for the year to come. This week we provide a global snapshot

of how crops are currently shaping up for some of the major global pro-

ducers. Whilst the US has been a focus of late, as harvest nears in the

northern hemisphere we are likely to hear a lot more about other com-

peting nations too.

El Niño - What does history tell us?

Allocating shipping capacity; LTA’s vs Auction

We discuss different methods of allocating shipping capcity and what

criteria we would seek for the most efficient allocation.

Port Access: “If I was in front of the ACCC…!!!”

An article by Ron Storey discussing recent requests from Victorian port

termainal operators for exemption from port access undertakings.

Technical Analysis

Wheat Strategy

Monitor liquidity in old crop markets and engage by placing a firm offer.

Production uncertainty has seen strong premiums priced into new crop

values. Be patient in the forward market, it’s a long growing season

Sorghum Strategy

Know the quality of your grain and the markets you intend to access

when marketing. Bids are not rewarding carry.

Barley Strategy

For unsold old crop grain, engage the market with firm offers. If consid-

ering forward sales via forward MG contracts, barley is showing better

value than wheat.

Canola Strategy

For old season canola we feel there is value in engaging the market by

placing a firm offer at your target price. We feel it prudent to take a

whole of business approach to you forward marketing strategy.

Australian Regional Market Reports

This week’s articles Key Market Indicators

Hannah Janson Chief Analyst [email protected]

Scott Niewand Commodity Analyst [email protected]

Ciaron McKinley Commodity Analyst [email protected]

David Huang Data Analyst [email protected]

David Chirnside Commodity Analyst [email protected]

Profarmer Grain is published by NZX Ltd, PO Box 6120, Melbourne, Vic, 3004. © NZX Agri Advisors Pty Ltd. Disclaimer: This report is published by NZX Agri Advisors Pty Limited

(ABN 94 090 519 798) (NZX Agri Advisors) (AFS Licence 223409). NZX Agri-Advisors Pty Limited is wholly owned by NZX Ltd who also own Australian Crop Forecasters and the Clear Grain Exchange among

other businesses. In this disclaimer, references to “the Agri Advisors Group” refers to NZX Agri Advisors, its related bodies corporate, and their officers, agents, authorised representatives and employees. This

publication is for information purposes only and contains unsolicited general information, without regard to any individual objectives, financial situation or needs. You should consider the appropriateness of

the information in this publication having regard to your objectives, financial situation and needs, and obtain specific individual financial advice from your financial advisor, before acting on information or

recommendations in this publication. This publication is not and should not be construed as an offer to sell or the solicitation of an offer to purchase or subscribe for any financial product. Decisions about

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cludes, to the fullest extent permitted by law, all liability for any loss or damage of any kind however rising in relation to this publication, including any reliance on it or making any transaction in connection

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14/04/15 This Wk Last Wk Change Last Year Change

AUD/USD Spot US c 0.7592 0.7600 -0.0008 0.9421 -0.1829

AUD/CAD Spot CA c 0.9560 0.9483 0.0077 1.0323 -0.0763

2 0 14 / 15 W heat

CBOT Wheat M ay 15 Usc/bu 502 528 -26 679 -177

CBOT Wheat M ay 15 $A/t 243 255 -12 265 -22

ASX EC Wheat M ay 15 $A/t 298 299 -1 326 -27

ASX WA Wheat M ay 15 $A/t 305 305 0 285 21

Brisbane 2014 APW 318 324 -6 367 -50

Newcast le 2014 APW 302 304 -2 331 -29

Port Kembla 2014 APW 293 295 -2 317 -24

Geelong 2014 APW 280 286 -6 308 -28

Port Adelaide 2014 APW 267 274 -7 280 -13

Kwinana (FIS) 2014 APW 309 312 -3 297 12

2 0 14 / 15 C ano la

ICE Canola M ay 15 $C/t 454 458 -4 464 -10

ICE Canola M ay 15 $A/t 475 483 -8 449 26

Newcast le 2014 Canola 489 500 -12 573 -84

Port Kembla 2014 Canola 490 501 -11 574 -85

Geelong 2014 Canola 487 499 -12 526 -40

Port Adelaide 2014 Canola 475 487 -12 485 -10

Kwinana (FIS) 2014 Canola 500 503 -3 543 -43

2 0 14 / 15 C oarse Grains

CBOT Corn M ay 15 Usc/bu 371 385 -15 503 -133

CBOT Corn M ay 15 $A/t 192 199 -7 210 -18

Brisbane 2014 Sorghum 307 294 13 344 -37

Brisbane 2014 Feed Barley 310 310 0 335 -26

Newcast le 2014 Feed Barley 289 289 0 310 -21

Port Kembla 2014 Feed Barley 266 268 -3 283 -18

Geelong 2014 Feed Barley 268 270 -2 248 20

Port Adelaide 2014 Feed Barley 275 276 -1 228 47

Kwinana (FIS) 2014 Feed Barley 305 299 6 250 55

2 0 15/ 16 W heat

CBOT Wheat Dec 15 Usc/bu 524 550 -27 679 -155

CBOT Wheat Dec 15 $A/t 257 269 -12 265 -8

ASX EC Wheat Jan 16 $A/t 299 302 -3 326 -26

ASX WA Wheat Jan 16 $A/t 295 298 -3 285 11

Brisbane 2015 APW 312 318 -6 320 -8

Newcast le 2015 APW 301 305 -4 313 -12

Port Kembla 2015 APW 297 301 -4 307 -10

Geelong 2015 APW 292 298 -6 303 -11

Port Adelaide 2015 APW 280 288 -8 289 -9

Kwinana (FIS) 2015 APW 290 304 -14 312 -22

WEEKLY GRAIN NEWSLETTER 15/04/2015 PROFARMER AUSTRALIA

www.profarmergrain.com.au 2 Ph 1300 302 143

International News

EU Crops

The 2015/16 season is shaping up well in the EU, with a mild winter

and adequate rainfall in most areas benefiting winter wheat condition and

providing a full moisture profile for spring planting. Areas of concern are

the western coast of Spain and Portugal where farmers have only re-

ceived half of their average rainfall.

Rainfall has been about average in most crop producing areas in

France, the only region of concern is the coastal area of Languedoc Rous-

sillon which is a producer of Durum and has only received 50% of the

average rainfall for this time of year.

Although rainfall has not been significant there is still adequate soil

moisture in most parts of Germany. Southern Germany is reporting that

there could be some delays in the development of the winter crop due to

inadequate snow cover exposing crops to frost.

With the outlook shaping up to be positive for spring plantings, there is

currently no news coming out of the EU that would provide a bullish

outcome for grain values at this stage.

Where the EU story has been supportive is the expectation of a lower

canola crop this year. As we’ve touched on in recent weeks smaller plant-

ed area is expected in Germany and the UK which could improve export

opportunities for Aussie canola in 2015.

Black Sea

The main winter wheat producing regions in Russia and Ukraine are

reporting that the majority of the crop is in good condition. Whilst there

was some concern around dry conditions as the crop came out of dor-

mancy the Ukrainian Agricultural ministry recently rated only 13% of the

crop to be in weak condition. This percentage is reportedly quite normal

for the winter crop and any heavily damaged area is expected to be re-

planted with the spring crop.

Recent rains in parts of Ukraine have reportedly encouraged further

corn plantings and the current forecast is for dry weather which is ideal

for spring planting.

As we have touched on in recent editions, the devaluation of both Rus-

sian and Ukrainian currencies over recent months has resulted in a rise in

input costs for farmers in these parts. Whilst this may not have a direct

impact on the market at this stage of the season the market is watching

for any impact this may have on crop yields if input use is reigned back

in response.

As more analysts come to the market with outlooks on

2015/16 season production prospects we are slowly starting

to paint a picture of the market place for the year to come.

This week we provide a global snapshot of how crops are

currently shaping up for some of the major global producers.

Whilst the US has been a focus of late, as harvest nears in

the northern hemisphere we are likely to hear a lot more

about other competing nations too.

The market is also waiting to see what unfolds in regards to the Rus-

sian wheat export duties. Export duties are currently scheduled to expire

in July, however at this stage Russia is in no rush to bring their decision

forward rather awaiting development of the new crop before they lift

current duties.

Canada

Most cropping regions in Canada are reportedly dry as warm conditions

bring planting dates forward. Parts of the prairies however are forecast

to receive a cold wet spring which could benefit certain parts of Sas-

katchewan, Manitoba and Alberta who have recorded lower than average

snow melt. There is talk that growers will start planting in Alberta 2-3

weeks ahead of normal.

Canadian values have pushed lower on the back of positive forecasts.

Current reports suggest that canola plantings will be down while wheat

acres will be up from last year on the back of a 9 percent rise in Durum

planted, this is due to record values for Durum on the back of a global

shortage last year. As the old adage goes “there’s no cure for high prices

like high prices!”

The Statistics Canada planting intentions report due out on the 23rd of

April will provide more direction around new crop planting intentions in

Canada and has the potential to bring further volatility in international

markets.

United States

The condition of the US winter wheat in the southern plains and fore-

cast rains continue to bring volatility to the market. This week saw fears

of yield loss ease as rains entered the forecast.

Recent rain and forecasts of widespread rain in some of the key areas

of concern have pushed the international wheat values lower over the

past week.

Although the USDA reduced the percentage of the crop rated good to

excellent from 44% down to 42%, the market is now expecting recent

US Hard Red Winter Wheat Growing Areas

US Soft Red Winter and Durum Wheat Growing Areas

Ave Production 24Mt

Ave Production 11Mt

Ave Production 2Mt

Source: http://www.smallgrains.org/

Source: http://www.smallgrains.org/

Current area of

concern

Current area of

concern

0.010

0.015

0.020

0.025

0.030

Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec Jan Feb Mar Apr

Russian Ruble (USc)

-19%



moisture to improve the crop condition ratings for winter wheat. Current

crop ratings are also well ahead of the same time last year when 34% of

the US winter wheat crop was rated good to excellent.

The US crop progress report showed that spring wheat planting was

17% complete at the start of the week, well above the average of 11%

for this time of the year and 5% this time last year. Forecast rains on the

spring wheat already planted have the potential to place further down-

ward pressure on international wheat values.

US Corn

Wet weather in the US delta continues to cause delays to corn planting

in the area. Reports at this stage suggest that the crop is only 2% plant-

ed, this is compared to the average of 5%. Forecast rains will continue to

delay the progress but as we saw last year, if farmers get some dry

weather and an opportunity to get back on the paddock it won’t take

long for the planting progress to get back to normal.

It is also still very early days in terms of corn planting and the planting

window is far from closing.

The more the corn planting is delayed, the higher the market perceives

the risk of a switch from corn to soybeans. However many expect the

first acres to switch will be lower yielding, hence this could increase the

average yield potential across the US corn crop potentially having limited

impact on production prospects at this stage.

South America

The South American soybean harvest continues to gain pace with re-

ports now suggesting Brazilian harvest is now 85% complete. As the

harvest progresses crop estimates continue to get bigger adding to the

old adage that ’big crops get bigger’. Brazilian analysts Conab raised their

Brazilian harvest estimates by 1Mt to 94.3Mt citing late rains which

boosted yields. The South American soybean crop continues to weigh on

international oilseed values as the crop is harvested.

The Argentinian harvest is commencing and looks to add further pres-

sure to global markets as supply becomes available. There are however

questions on how quick the Argentinian crop will hit the market though.

Reports suggest growers are attempting to store greater volumes in an

effort to prevent payment of the 35% export tax currently in place on

soybeans. With political elections in October many farmers are hoping for

a new government who may reduce this tax. Hence have signalled hold-

ing stock until the new government takes office in December. It seems to

be an ongoing standoff between producers and the elected government;

who are looking to encourage sales in order to collect required tax reve-

nue.

Despite these concerns a large portion will be exported and combined

with the Brazilian crop looks to have sparked a shift in Chinese imports

away from the United States. As the cheaper South American soybeans

have come onto the market US exports have declined as China instead

opts for South American soybean produce. This trend looks set to contin-

ue for the coming months with minimal export activity expected to meet

the required USDA forecasts. This has had a bearish influence on overall

oilseed values with an abundance of cheaper produce now available from

South America.

0.0

0.5

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1.5

2.0

2.5

3.0

3.5

Sep Oct Nov Dec Jan Feb Mar Apr May Jun Jul Aug

US Soybean Export Pace

US Weekly Exports Req to meet USDA f'castWkly Ave Outstanding sales

Mt

0

5

10

15

20

25

30

35

40

45

50

Sep Oct Nov Dec Jan Feb Mar Apr May Jun Jul Aug

US Soybean Export Pace

This Year Last Year

Mt

25

35

45

55

65

75

Oct Nov Dec Jan Feb Mar Apr May Jun Jul

US Winter Wheat Condition - Good to Excellent

10 year range

2015/16

2014/15

Dormancy

%

0

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50

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90

100

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US Spring Wheat Planting Progress

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2015/16

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US Corn Planting Progress5 yr range

5 yr ave

2015/16

%



Whilst offshore markets focus on conditions in the US Southern Plains,

the Australian weather outlook is building a complex of its own, the possi-

bility of an El Nino event in the Southern Hemisphere winter/spring.

BOM this week estimated a 70% chance of El Niño by June. El Niño is

normally associated with lower than average winter/spring rainfall over

much of “eastern” Australia, however the reality is that no two El Niño

events are the same. The impact of an El Niño event for Australian pro-

ducers will depend on a raft of factors, including, but not limited to, exist-

ing subsoil moisture and actual rainfall amounts that eventuate.

The two weather maps below show just how variable an El Niño event

can be, with the main graphic showing the mean rainfall deciles over 12 of

the most severe El Niño events as collated by BoM. The inset shows Aus-

tralian Rainfall deciles during the 1993/94 El Niño event.

What does this mean for production?

We’ve taken historical yield data from 1990/91 season to the 2012/13

season, and used this to calculate yield historical deciles on a state by

state basis. The table below shows average state yield deciles for each

state in each El Niño year. A decile effectively ranks historical data obser-

vations. For example a decile 2 means that the observation fell in the bot-

tom 20% of results observed over the specified time period. So a Sth Aus-

tralian yield decile of 7.7 in 2009/10 was in the top 77% of all yield results

for Sth Australia between 1990/91 and 2012/13.

Not all El Niño years will result in below average production, however an

El Niño event would increase the likelihood of below average growing sea-

son rainfall and by deduction it would not be unreasonable to expect that

production would also be below average.

What does this mean for my marketing plan?

General dryness across the majority of East Coast growing regions is

seeing forward MG prices trading at historically strong premiums over

CBOT futures values (see last week’s newsletter for more).

Despite our preference to use CBOT futures for making forward sales

this early in the season, at the moment with such strong premiums pre-

sent, the value is in cash. Whilst some may be comfortable making forward

sales this early in the season via MG contracts, for the rest, it’s a long

growing season. If your preference if for swaps be patient and be prepared

to capture opportunities if they present as the season progresses.

Furthermore, ensure you’re updating your profitable price and your per-

centage sold position as you update your yield outlook as the season pro-

gresses so as not to overcommit yourself if conditions turn less favourable.

El Niño - What does history tell us?

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NSW Average Historical Wheat Yields (t/ha)El Nino Yr Non El Nino Yr Prev 5 Yr Ave

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VIC Average Historical Wheat Yields (t/ha)El Nino Yr Non El Nino Yr Prev 5 Yr Ave

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QLD Average Historical Wheat Yields (t/ha)El Nino Yr Non El Nino Yr Prev 5 Yr Ave

Wheat Yield Decile by El Nino Event (t/ha) 1991/92 1993/94 1994/95 1997/98 2002/03 2006/07 2009/10

NSW 2.3 9.1 0.0 5.5 1.4 0.9 1.8

QLD 0.5 1.4 0.0 3.6 2.3 2.7 4.1

WA 3.2 5.5 2.7 8.2 0.0 0.9 4.1

SA 3.6 5.0 0.9 6.8 0.5 0.0 7.7

VIC 4.1 9.5 0.9 4.5 0.5 0.0 3.6

Winter—Spring Mean Rainfall Deciles

during 12 “ typical” El Nino years

Inset: Rainfall Deciles Jul-Dec 1993, 1993-94 El Niño event

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SA Average Historical Wheat Yields (t/ha)El Nino Yr Non El Nino Yr Prev 5 Yr Ave

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WA Average Historical Wheat Yields (t/ha)El Nino Yr Non El Nino Yr Prev 5 Yr Ave



The ACCC is currently reviewing Port Access codes around the country

at the request of a number of the bulk handlers who operate the infra-

structure. Requests in SA and WA this year and last have called for a

review of the auction systems currently in place, in favour of a combina-

tion of long term agreements between exporters and bulk handlers and

allocation of short term capacity…. So what does this mean?

For several years now SA and WA port capacity has been allocated via

an auction system. Each system has subtle differences but the outcome

was similar. Merchants paid considerable upfront premiums (at times over

$60/t) to secure access to shipping capacity, with peak months (Jan-Apr)

bringing the highest premiums.

Whilst the premiums were hefty, they were refunded to varying de-

grees if the slot was used. It is a “use it or lose it” system, where the slot

premium becomes a “cost of not-executing”, rather than a hefty burden

on supply chain costs. Regardless of this, there is no doubt this system

has distorted the Australian grain market landscape at times over the last

few years.

The auction system ties up a significant amount of trade capital.

An exporter who intends to ship 100,000t and books capacity at $60/t

is required to pay these funds up front. This means $6,000,000 has to be

put in a trust account until the slot was executed. Whilst larger companies

may have had the access to capital required to do this, many smaller

exporters don’t. Hence this upfront cost ran the risk of pricing potential

participants out of the market. In the long run, less participants’ means

less competition at the silo and ultimately lower farm gate returns.

In South Australia last year an estimated $125M was paid by the trade

to secure shipping capacity last season, and $365M in Western Australia.

That means nearly half a billion dollars of industry capital was tied up

in securing export slots.

From a grower’s perspective, it would be much better to see this capital

available to be utilised to buy grower grain. From an exporter’s perspec-

tive, if they have a reasonably modest goal of exporting say, 1Mt per

annum (about 5% of Australia’s annual exports) and have to pay $50-60/t

for slot capacity, then they might say…”I can build my own port for that

sort of money ($50-60M), and have it available every year!!” And clearly,

some have already made that calculation (Bunge, Quattro (Qube-Noble-

Emerald-Cargill)).

Shipping slot premiums can create domestic price distortion

If we look at last season; as the season progressed and absent spring

rains saw production prospects fall below the market’s previous expecta-

tions, basis premiums in Aussie markets rallied. Those who had commit-

ted to export capacity wanted to get grain ownership so they knew they

had something to ship and prices being bid to the grower moved above

offshore values.

Harvest came in and grower selling, combined with strong offshore

futures, saw these premiums erode away in the lead up to Christmas.

However, it wasn’t long before selling slowed as futures values fell away

and some exporters found themselves bidding prices well above their

competitors in order to secure tonnes rather than risk forgoing the capital

they had invested in shipping capacity.

One of the most visible examples of this was Kwinana canola, where we

saw premiums well above other Australian states as some exporters

found themselves short grain, but long shipping slots.

This situation served some growers well. They captured the opportunity

to sell at season highs and well above values seen before or after.

However the extent to which these opportunities arose depended on

several factors:

How much had been paid for the slot

If a merchant had $60/t on the line vs $10/t this reflected the cost

of “not executing”. The premiums paid gave an indication of how

high they might be willing to go to secure tonnes.

Did the trade have a sale on the other end?

Similarly to above, if a merchant had paid $10/t for a slot and they

didn’t have an export sale on the books, they may have been willing

to forgo the slot.

Did they already have ownership of the grain they needed (how far

sold was the grower)?

Heavy shipping slot costs meant many in the trade had to be very

organised and already owned the grain they needed to fill the boats.

Hence the shipping slot auction system almost becomes a guessing

game for some who would hold grain back from the market and wait for a

short to appear.

Shipping slot premiums can create export price distortion

In what is an incredibly competitive export market, it isn’t always easy

for exporters to get an export sale on the books. Rather than risking for-

going the capital tied up in export slots, traders may start discounting

export offers. This can see Aussie grain being offered for export (FOB and

CNF offers) well below the cost of replacement from the grower.

Profarmer was recently in Singapore for the Australian Grains Industry

and Global Grain Asia conferences. The talk amongst several international

traders there was that they find the Australian export shipping system

very complex and at times too risky to participate in. Unless Australia can

address this perception, it will mean less liquidity and in turn less compe-

tition for Australian grain in the international marketplace. Meanwhile

some Australian trading companies are bleeding money in order to

“minimise losses” rather than “maximise profits”.

Whilst the situation may have served the grower well at times in the

short term, in the longer term the auction system is not contributing to

efficiencies in the Australian supply chain. We feel this system is not a

sustainable long term solution for the Australian grain industry.

Allocating shipping capacity; LTA’s vs Auction

0

10

20

30

40

50

60

70

0

20

40

60

80

100

120

FH N

ovLH

No

vFH

Dec

LH D

ecFH

Jan

LH J

anFH

Feb

LH F

eb

FH M

arLH

Mar

FH A

pr

LH A

prFH

May

LH M

ayFH

Jun

LH J

un

FH Ju

lLH

Ju

lFH

Au

gLH

Aug

FH S

epLH

Se

p

Pt Adelaide Port Capacity Allocation (Outer Harbor)

Awarded Allocat ion Auction Premium $/t (high) Auction Premium $/t (low)

'000t $/t

400

420

440

460

480

500

520

540

Jul Aug Sep Oct Nov Dec Jan Feb Mar Apr

2014/15 Aussie Canola

ICE Futures ($A/t) Newcastle Geelong

Port Adelaide Port Kembla Kwinana



What about Long Term Agreements (LTA’s)?

Long term agreements are being proposed as part of an alternative

solution to the current auction model.

Long term agreements would provide exporters the opportunity to buy

shipping capacity up front for an extended period of time, providing the

exporter certainty over their access to port capacity and also providing

certainty of income to the bulk handler to then go and invest in infra-

structure, etc.

Investors in infrastructure such as a port terminal are exposed to pro-

duction risk of a failed season, reducing throughput through their facili-

ties and in turn lower revenues in such years. By negotiating long term

agreements the bulk handler is able to transfer some of that risk to the

exporter who commits to long term capacity and is bound to pay for the

capacity regardless of whether or not the grain is there to use it.

Some exporters won’t be comfortable making commitments 2 or more

years out. Such commitments may not be in line with their business

strategy or their risk appetite. Hence the amount of capacity available for

short term commitments and the allocation of such will be important.

Short term capacity allows for the varying risk appetites of the different

businesses participating in Australian grain exports, whilst also allowing

for new entrants to enter the market.

Hence one of the potential issues with long term agreements is getting

the balance right between how much capacity is tied up in LTA’s and how

much is available for short term agreements.

What is going to make the shipping slot allocation system effi-

cient?

At Profarmer we agree that the current auction system is not ideal.

Whilst it may generate opportunistic returns to some growers in the short

term, in the long term we feel the accumulated inefficiencies in the sup-

ply chain will ultimately result in lower farm gate returns. Hence we en-

courage any initiatives to review the current port access undertakings

which will lower supply chain costs.

Ultimately the shipping capacity system is about allocating scarce re-

sources amongst market participants. Below are some of the criteria we

feel are critical to creating an efficient market place for shipping capacity.

1. Transferability

Regardless of how a shipping slot has been allocated we feel the ability

to transfer or trade a slot in a secondary market place is critical to the

efficient allocation of export capacity. This allows shipping capacity to be

transferred freely between market participants at a price determined by

the market.

2. Access for new entrants

Any proposed system needs to allow new participants to enter and exit

the market and at a market determined price. If the proposed LTA

agreements were to embed export capacity in the hands of a few, larger

players, this will reduce competition for grower grain and the full benefits

of a deregulated export market will not be realised. A cosy outcome for a

few large exporters is not a recipe for good competition!

3. Equal access to information

Information like the current shipping stem published by each bulk han-

dler provides all market participants with equal access to information

about port capacity. This information creates a more transparent market

place and helps all participants make better decisions about participating

in the market. The provision of such information must be continued un-

der any revised protocols or else the organisations who operate the facili-

ties will have an information advantage over other participants.

Whilst in the short term it might seem unfavourable for some growers

to potentially forgo opportunistic premiums we’ve witnessed in recent

years, we feel a review of the port access undertakings is critical to the

long term sustainability and efficiency of the Australian grain export sup-

ply chain.

Last week, the Australian Competition and Consumer Commission

(ACCC) released draft determinations proposing to grant exemptions for

Emerald’s Melbourne Port Terminal (MPT) and GrainCorp’s Geelong port

terminal under the mandatory wheat code for port access. (See https://

www.accc.gov.au/regulated-infrastructure/wheat-export/victorian-wheat-

ports-exemption-assessments). The code regulates bulk wheat port ter-

minal operators to ensure exporters have fair and transparent access to

wheat port terminals. The ACCC proposes to not grant an exemption to

GrainCorp’s Portland terminal.

The logic behind this is that there is now sufficient competition be-

tween these two ports and in the general supply chains in Victoria (which

includes container packers and domestic consumers), along with the

impending Bunge facility at Geelong, that there is no longer a require-

ment to regulate the port terminal operators. The ACCC has asked for

comment/submissions on its draft determinations by 24 April 2015. You

can bet that unless there are strong arguments to the contrary, these

draft determinations will be converted to final determinations and these

port operators will be exempt from parts of the Code.

This will largely mean the operators can negotiate and determine their

own terms of access direct with their exporter customers, without having

to be subject to ACCC oversight.

So, if you were in front of the ACCC, what would you say?

This is a very complex issue, so rather than attempt to lay out all the

possible scenarios here, perhaps it’s worth thinking about what out-

comes we would like the ACCC to focus on for any port terminal service

in our grain supply chains? Here are a couple of ideas…

Will it lower supply chain costs?

Fundamentally, Australian grain has to compete on the global market.

Therefore, working back from what the end customer is prepared to pay

for Aussie grain compared to competitor grain, is where it starts.

From that point, we need the lowest supply chain costs to arrive at the

best farm-gate returns. That means sea freight, fobbing costs, freight to

port, up-country storage costs, farm to storage site, etc.

The thing about the best supply chains is that they are connected –

they cannot be looked at as isolated pieces. So please Mr.ACCC, can you

make sure the system will drive the end-to-end cost down, not just indi-

vidual pieces of the chain? Are there commercial incentives in place be-

tween the players to drive these costs down?

Will it improve competition for grain back up the supply chain to

farm gate?

One of the unlevel parts of our supply chain, is the capture of infor-

mation on stock levels, grain quality and ownership. This information

currently is only available to storage network operators including port

terminal operators, yet they service a range of competing exporters. So,

Mr ACCC, if you alter the rules by which those parties can negotiate ac-

cess to port terminals, can you also please ensure that the marketplace

(in order to compete for grain through the supply chain) can have the

same access to stocks information as the port terminal operator?

The reporting of grain stocks information in Australia is “third world”

standard, so unless we equip the market with accurate and reliable

stocks data, the current imbalance of trading information will erode the

benefits of further deregulation. Information capture is just as effective,

if not more effective, in extracting margins as physical ownership of criti-

cal points in the supply chain.

Port Access: “If I was in front of the ACCC…!!!”

Ron Storey

https://www.accc.gov.au/regulated-infrastructure/wheat-export/victorian-wheat-ports-exemption-assessments





Technical Analysis Update Rob Imray - Farmarco

Australian Dollar (daily chart right)

We last looked at the A$ in early February

and at that stage we concluded at 0.7500

was the initial target for the push lower (or

more specifically 0.7200). Little has

changed since then.

The A$ has pushed as low as 0.7533 and

otherwise tested the resistance toward

0.8030 (made a high at 0.7938 which we

will call close enough.

While momentum is waning to the down-

side the bulls have not been able to turn

momentum higher and hence we would

continue to expect the market to leak low-

er in the near term although perhaps at a

slower rate of knots than say late 2014.

Longer term (monthly chart below) we remain bearish on A$ but not

significantly bearish from here. Our overall target, for this now 3 1/2 year

downtrend, is the uptrend line (green) which comes in around 0.7200.

Reaching 0.7200 would mean the A$ over the period would have lost

0.38 (38 cents) which would be the similar to the 0.38 lost (40%) during

the GFC in 2008, the 0.35 (42%) lost between 1996 and 2000 (in a little

over four years) and the 0.39 (40%) lost just

after to float of the A$ in 1983 and major low

in mid 1986. The period from early 1989 to

late 1993 saw a 0.25 (28%) drop over 4 1/2

years.

The point being that a drop to 0.7200

would represent a similar fall to other recent

major corrections in the market and should

this occur around mid 2015 (just saying) then

it would be around the four year maturity

stage of the trend. Short of a significant fun-

damental change in the market we are not

looking for much under 0.7200.

(written Wed 15 Apr)

1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016

0.45

0.50

0.55

0.60

0.65

0.70

0.75

0.80

0.85

0.90

0.95

1.00

1.05

1.10

0.45

0.50

0.55

0.60

0.65

0.70

0.75

0.80

0.85

0.90

0.95

1.00

1.05

1.10

Resistance Region

Resistance 0.7910 - 0.8033

Resistance 0.8911

Australian Dollar Global

50 50

Relative Strength Index (23.4006)

November December 2014 February March April May June July August September October November December 2015 February March April May

0.74

0.74

0.75

0.75

0.76

0.76

0.77

0.77

0.78

0.78

0.79

0.79

0.80

0.80

0.81

0.81

0.82

0.82

0.83

0.83

0.84

0.84

0.85

0.85

0.86

0.86

0.87

0.87

0.88

0.88

0.89

0.89

0.90

0.90

0.91

0.91

0.92

0.92

0.93

0.93

0.94

0.94

0.95

0.95

0.96

0.96

0.74

0.74

0.75

0.75

0.76

0.76

0.77

0.77

0.78

0.78

0.79

0.79

0.80

0.80

0.81

0.81

0.82

0.82

0.83

0.83

0.84

0.84

0.85

0.85

0.86

0.86

0.87

0.87

0.88

0.88

0.89

0.89

0.90

0.90

0.91

0.91

0.92

0.92

0.93

0.93

0.94

0.94

0.95

0.95

0.96

0.96

Resistance circa 0.7900

Australian Dollar Global

50 50

Relative Strength Index (43.9221)



Wheat

Old crop

The recent focus and rhetoric has all be around new crop values how-

ever we recognise many growers still hold old season grain. Markets

have continued to be impacted by volatility in offshore markets with

changing weather developments in the northern hemisphere the key

driver.

Market liquidity for old season grain is beginning to thin which can be

seen with the reduced number of buyers bidding. This will be a major

risk as the season progresses and needs to be considered.

Given the market volatility expected in the coming months as the mar-

ket assesses the condition of the northern hemisphere crop we feel this

should provide opportunity to make further sales. Continue to monitor

the market and be prepared to pull the trigger when these opportunities

present. Understand your access to markets going forward with export

programs expected to wind down, exporter appetite should too.

New crop

Dry weather across much of the Australian East Coast and South Aus-

tralia has resulted in increased premiums in Aussie forward prices since

late December. New crop wheat basis for the current time of year is at

one the highest points for the previous 5 years. The trade have priced

production uncertainty into forward values due to the concern surround-

ing new crop conditions.

Current values have some growers considering contracting for the

15/16 season. For those taking forward price protection we generally

prefer to use futures and bank swaps this early in the season. However

at current prices the value is in cash.

Hence for those growers who have confidence in production and typi-

cally contract grain at this time of year, then we feel it best to do so via

forward MG contracts as these are showing much stronger value than

CBOT futures values.

TO THE POINT

For old season crop monitor liquidity and engage the market

by placing a firm offer.

Production uncertainty has seen strong premiums priced into

new crop values.

Be patient in the forward market, it’s a long growing season.

However, if you are not comfortable making physical forward sales at

this point in time you should be content sitting on your hands. It is a long

growing season and with the current volatility in CBOT futures there may

be opportunity to participate via futures or swaps further down the track.

Regardless of your position, we feel it prudent to make sure you’ve

got the right tools in your grain marketing tool box and ensure you are

organised to capture any forward marketing opportunities that may arise.

See last week’s newsletter for more on forward marketing.

OLD CROP 2014/15 NEW CROP 2015/16

14/04/15 This Wk Last Wk Change This Wk Last Wk ChangeBrisbane $312 $318 -$6 $55 $49 $6Newcastle $301 $305 -$4 $44 $36 $8Port Kembla $297 $301 -$4 $40 $32 $8Geelong $292 $298 -$6 $35 $29 $6Port Adelaide $280 $288 -$8 $23 $19 $4Kwinana (FIS) $290 $304 -$14 $33 $35 -$2

14/04/15 APH2/H1 H2 APW ASW AGP FED1Brisbane $15 $6 $312 -$15 -$25 -$49Newcastle $15 $6 $301 -$20 -$33 -$53Port Kembla $15 $6 $297 -$20 -$33 -$53Geelong $12 $7 $292 -$22 -$37 -$59Port Adelaide $11 $6 $280 -$22 -$37 -$69Kwinana (FIS) $11 $6 $290 -$18 -$42 -$76

2015/16 APW Wheat Track Dec Basis

2015/16 Wheat Average Grade Spread

14/04/15 This Wk Last Wk Change This Wk Last Wk ChangeBrisbane $318 $324 -$6 $75 $69 $6Newcastle $302 $304 -$2 $59 $49 $10Port Kembla $293 $295 -$2 $50 $40 $10Geelong $280 $286 -$6 $37 $31 $6Port Adelaide $267 $274 -$7 $24 $19 $5Kwinana (FIS) $309 $312 -$3 $66 $57 $9

14/04/15 APH2/H1 H2 APW ASW AGP FED1Brisbane $323 $318 $318 $317 $317 $312Newcastle $324 $304 $302 $302 $301 $275Port Kembla $293 $295 $293 $292 $284 $270Geelong $290 $281 $280 $277 $271 $219Port Adelaide $277 $272 $267 $262 $258 $241Kwinana (FIS) $312 $311 $309 $306 $290 $290

2014/15 APW Wheat Track May Basis

2014/15 Wheat by Grade

Date Ex Rate Dec 15 Fut Dec 15 Fut Pt Adel APWDec 15 Usc/bu $A/t $A/t Basis $A/t

07/04 0.7519 550.00 $269 $288 $1908/04 0.7538 546.75 $267 $286 $1909/04 0.7600 546.50 $264 $285 $2110/04 0.7591 540.00 $261 $284 $2313/04 0.7587 546.50 $265 $283 $1814/04 0.7492 523.50 $257 $280 $23Wkly Chge -0.0027 -26.50 -$12 -$8 $4

2015/16 Dec Futures, Fwd Wheat Prices and Basis LevelsDate Ex Rate May 15 Fut May 15 Fut Pt Adel APW

spot Usc/bu $A/t $A/t Basis $A/t07/04 0.7600 527.75 $255 $274 $1908/04 0.7629 526.00 $253 $274 $2109/04 0.7684 526.25 $252 $276 $2410/04 0.7692 518.75 $248 $273 $2513/04 0.7673 526.50 $252 $271 $1914/04 0.7592 502.25 $243 $267 $24Wkly Chge -0.0008 -25.50 -$12 -$7 $5

2014/15 May Futures, Fwd Wheat Prices and Basis Levels

230

250

270

290

310

330

350

Dec Jan Feb Mar

2015/16 APW Wheat

CBOT Port Adelaide Port Kembla BrisbaneNewcastle Kwinana Geelong

-40

-20

0

20

40

60

80

Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec

Geelong New Crop Wheat Basis2010 2011 2012 2013 2014 2015

A$/t



Barley

TO THE POINT

For unsold old crop grain, engage the market with firm offers

If considering forward sales via forward MG contracts, barley

is showing better value than wheat.

Old crop

Old crop prices remained relatively unchanged week on week. With

such small volumes reported to be trading there is little moving the mar-

ket one way or another. With attractive prices on offer throughout the

harvest period growers appear heavily if not fully sold at current time.

For those with remaining old season grain while values in some parts

have come off season highs, prices remain historically strong and are

performing well relative to wheat. We feel it is prudent to capture selling

opportunities as they arise. With minimal volumes of unsold barley re-

maining communicate to the market your target price by placing a firm

offer. The trade is unaware where the remaining grain is located and will

not necessarily publicly advertise their bid. Hence we feel it prudent to

alert the trade to your grain and engage the market.

The sorghum harvest across northern Australia is back underway for

many after weather interruptions last week. Thankfully prices rebounded

sharply from a slump in prices over the last fortnight. Values rallied any-

where between $7-13/t posting strong grains week on week.

Our overall sorghum strategy remains relatively unchanged however

can differ slightly depending on the situation. The incoming sorghum

crop has a great level of variance in both yield and quality with each

region performing differently. Whilst some of the crop has been decimat-

ed by dry conditions and storm damage, large portions look to achieve

solid yields.

This places increased importance on knowing both the quality of your

grain as well as the market your crop is ultimately destined for.

SOR1 quality may have increased benefit in being delivered directly to

the bulk handling system. With market support heavily derived from

export demand having grain already in the system should provide access

to bulk export opportunities.

Additionally with a strong yield outlook for some, storing SOR1 in the

system should free up on farm storages for SOR2 and lower.

Sorghum

If destined for domestic destinations, storing downgrade and off-spec

sorghum in on farm storages may provide greater flexibility in accessing

these markets. Furthermore discounts to SOR1 are typically not as severe

outside of the system.

Given the strong export nature of current demand we feel there is

value in engaging the market at current values. Current bids reward

immediate delivery with discounts in place for later June/July delivery.

When considering the US sorghum crop is harvested from June on-

wards there may be considerable competition into Chinese markets for-

ward of this period. Given these factors we feel this is not a market envi-

ronment that will reward carry and hence we see value in executing sales

as production allows.

It is also important to separate the pricing decision from the delivery

decision. You don’t have to wait until you deliver your grain before you

market it. If you have an understanding of your production don’t be

afraid to secure pricing through a forward contract prior to delivery.

Don’t miss out on pricing opportunities whilst you’re waiting to deliver.

TO THE POINT

Know the quality of your grain and the markets you intend to

access when marketing.

Bids are not rewarding carry.


New crop

As we discussed in last week’s forward marketing special and this

week’s wheat strategy, some growers are now starting to consider for-

ward price protection.

With strong premiums built into domestic forward cash values over

CBOT futures, cash is a more attractive proposition right now, despite

our preference to achieve forward price protection via futures markets at

this point in the season.

If you are considering making forward sales via forward MG contracts

at current price relativities we feel F1 MG barley values are showing

better value than wheat.

By contracting via a F1 MG barley contract you are also locking in the

wheat—barley spread which may suit those who have decided to in-

crease barley area this year on the back of last season's price perfor-

mance.

If you are not comfortable taking on the production risk of a forward

contract this early in the season or don’t typically contract until later in

the year then this is instead a period of organisation. Get your tools in

the toolbox so you are prepared to act if opportunities present.

14/04/15 This Wk Last Wk ChangeBrisbane $310 $310 $0Newcastle $289 $289 $0Port Kembla $266 $268 -$2Geelong $268 $270 -$2Port Adelaide $275 $276 -$1Kwinana (FIS) $305 $299 $6

2014/15 Feed Barley

14/04/15 This Wk Last Wk ChangeBrisbane $7 $14 -$7Newcastle $13 $15 -$2Port Kembla $26 $26 $0Geelong $9 $13 -$4Port Adelaide -$13 -$6 -$7Kwinana (FIS) $1 $9 -$8

2014/15 ASW Wheat - Feed Barley Spread

14/04/15 This Wk Last Wk ChangeBrisbane $283 $278 $5Newcastle $274 $270 $4Port Kembla $268 $267 $1Geelong $267 $267 $0Port Adelaide $265 $260 $5Kwinana (FIS) $281 $276 $5

2015/16 Feed Barley

14/04/15 This Wk Last Wk ChangeBrisbane $29 $40 -$11Newcastle $27 $35 -$8Port Kembla $29 $34 -$5Geelong $25 $31 -$6Port Adelaide $15 $28 -$13Kwinana (FIS) $9 $28 -$19

2015/16 APW Wheat - Feed Barley Spread

14/04/15 Location This Wk Last Wk ChangeSorghum Brisbane $307 $294 $13Sorghum Newcastle $310 $300 $10Sorghum Delivered Downs $295 $288 $7Sor 2 Delivered Downs - - -

Indicative Sorghum Prices 2014/15



maining grain is located so communicating this to the buyers is im-

portant. Regardless of your target price communicate this to the buyer

through placing a firm offer to the market.

New crop

As the seeding rigs again start up the marketing focus inevitably

switches to new crop. Given current price performance of canola relative

to both wheat and barley we aren’t rushing to engage in new crop canola

markets. As a general rule of thumb we will be watching for canola val-

ues to double wheat values. This reflects the higher costs of producing a

canola crop and that for many, canola yields are generally approximately

half that of their wheat crop.

For growers who have confidence in production and typically forward

contract at this time of year we feel it prudent to take a whole of busi-

ness approach. Focus on getting cover of a percentage of expected reve-

nue, rather than taking a commodity by commodity approach.

It is a long growing season and there is a long time between now and

harvest for pricing opportunities to present. It may not feel natural but

sometimes the best approach is to do nothing! Growers should feel com-

fortable sitting on their hands and instead ensuring they are organised to

capture opportunities if they present in coming months.

Old crop

Volatility in offshore markets continues to be directly reflected in do-

mestic canola values. Local markets are see-sawing in all directions in

line with fluctuations in both the Canadian and European futures mar-

kets.

With the large South American soybean harvest that is currently under-

way in consideration, we have been advocates of having canola sales

concluded by now. For growers who have wound up their canola sales

program you can now sit back and focus on getting the new crop in the

ground.

We opted to hold a portion of our crop through the harvest period in

the hope of higher prices and were ultimately rewarded. Capturing these

higher values we then executed sales prior to the South American soy-

bean harvest coming online in March/April reducing exposure to any

potential price risk that may have occurred as the soybean harvest com-

menced. With sales concluded attention can now be averted to planting

the crop preparing our marketing strategy for the year ahead.

We do however understand that each farming operation is different

and that naturally some growers will have held some old season canola

crop for a multitude of reasons. For those in this position now be a good

time to consider ‘what is going to drive the price higher going forward?’

There is the potential for shorts in the trade which could potentially see

buyers pay over the odds to fulfil requirements. However these are often

short lived and for minimal volumes. It is in our view that this is a high

risk strategy and with large portions of the crop already in trade owner-

ship certainly may not eventuate. Given the volatility currently evident in

domestic markets we feel there is instead value in setting a target price

and making a firm offer to the market.

The key here though is that the trade are unaware of where the re-

Canola

TO THE POINT

For old season canola we feel there is value in engaging the

market by placing a firm offer at your target price.

We feel it prudent to take a whole of business approach to

you forward marketing strategy.


14/04/15 This Wk Last Wk Change This Wk Last Wk ChangeNewcastle $490 $495 -$5 $19 $14 $5Port Kembla $495 $495 $0 $24 $14 $10Geelong $490 $495 -$5 $19 $14 $5Port Adelaide $493 $495 -$2 $22 $14 $8Kwinana (FIS) $507 $516 -$9 $36 $35 $1

2015/16 Canola Track Nov Basis14/04/15 This Wk Last Wk Change This Wk Last Wk ChangeNewcastle $489 $500 -$11 $14 $17 -$3Port Kembla $490 $501 -$11 $15 $18 -$3Geelong $487 $499 -$12 $12 $16 -$4Port Adelaide $475 $487 -$12 $0 $4 -$4Kwinana (FIS) $500 $503 -$3 $25 $20 $5

2014/15 Canola Track May Basis

Date Ex Rate May 15 Fut May 15 Fut Geel CanolaSpot $C/t $A/t $A/t Basis $A/t

07/04 0.9483 $458 $483 $499 $1608/04 0.9549 $454 $475 $487 $1209/04 0.9641 $453 $470 $483 $1310/04 0.9680 $453 $468 $479 $1113/04 0.9641 $454 $471 $481 $1014/04 0.9560 $454 $475 $487 $12Wkly Chge 0.0077 -$4 -$8 -$12 -$4

Date Ex Rate May 15 Fut May 15 Fut Geel CanolaSpot €/t $A/t $A/t Basis $A/t

07/04 0.6947 € 364 $524 $499 -$2508/04 0.7060 € 364 $515 $487 -$2809/04 0.7128 € 365 $512 $483 -$2910/04 0.7216 € 370 $512 $479 -$3313/04 0.7238 € 370 $511 $481 -$3014/04 0.7179 € 375 $522 $487 -$35Wkly Chge 0.0232 € 11 -$2 -$12 -$10

2014/15 May Matif Futures, Fwd Canola Prices and Basis Levels

2014/15 May ICE Futures, Fwd Canola Prices and Basis LevelsDate Ex Rate Nov 15 Fut Nov 15 Fut Geel Canola

Dec 15 $C/t $A/t $A/t Basis $A/t07/04 0.9381 $451 $481 $495 $1408/04 0.9446 $446 $472 $495 $2309/04 0.9556 $445 $466 $495 $2910/04 0.9577 $444 $464 $490 $2613/04 0.9575 $443 $463 $490 $2714/04 0.9463 $446 $471 $490 $19Wkly Chge 0.0082 -$5 -$10 -$5 $5

Date Ex Rate Nov 15 Fut Nov 15 Fut Geel CanolaDec 15 €/t $A/t $A/t Basis $A/t

07/04 0.6844 € 358 $523 $495 -$2808/04 0.6917 € 358 $518 $495 -$2309/04 0.7005 € 358 $511 $495 -$1610/04 0.7103 € 359 $505 $490 -$1513/04 0.7125 € 361 $506 $490 -$1614/04 0.7055 € 363 $515 $490 -$25Wkly Chge 0.0211 €5 -$8 -$5 $3

2013/14 Nov Matif Futures, Fwd Canola Prices and Basis Levels

2015/16 Nov ICE Futures, Fwd Canola Prices and Basis Levels

400

420

440

460

480

500

520

540

Dec Jan Feb Mar

2015/16 Aussie Canola

ICE Futures ($A/t) Newcastle Geelong

Port Adelaide Port Kembla Kwinana

www.profarmergrain.com.au 11 1300 302 143

South Australian Markets


vide direction. The key action in the current period is to get organised so

that marketing strategies can be executed when opportunities arise.

Given the volatile nature of CBOT futures markets opportunities may be

short lived, so don’t let a lack of organisation prevent you from capturing

opportunities when they present.

Old crop

South Australian old crop values came under pressure this week from

lower offshore values week on week. Thankfully domestic values failed to

reflect the full extent of losses however still managed losses in the range

of $5-10/t.

Anecdotal reports suggest the remaining volumes of old season grain

are minimal with large portions of the harvest now in the trades hands.

There are early indications that shipping programs are beginning to wind

down with the reduced volumes evident on the forward shipping stem. As

illustrated in the forward stem chart by Australian Crop Forecasters be-

low, activity out of Port Giles, Thevenard and Wallaroo is markedly re-

duced going forward. This poses a threat to market liquidity going for-

ward and should be strongly considered if opting to hold grain. Buyer

appetite is becoming increasingly sporadic placing further importance on

communicating your price to the market and alerting the trade to your

remaining grain.

New crop

Conditions have been dry across much of South Australia over the

summer raising a degree of concern over the 2015/16 season for the

region. This concern has resulted in a risk premium being priced into

forward values. Currently 15/16 prices are trading a premium to old crop

values. In Port Adelaide the spread is $13/t favouring 15/16 values at

$280/t over current old crop (14/15) at $267/t. We expect for the large

majority of growers this forward price will not be attractive enough to

warrant sales considering the $8/t drop from last week and the uncer-

tainty around production. If however rain fails to grace regions of Aus-

tralia through the sowing and early growing periods expect premiums

over international markets to increase further. This could see forward

pricing premiums extend over old crop as the trade attempts to secure

grain ahead of the coming season.

We will continue to monitor the market for opportunity going forward,

with developments in offshore markets and the local season sure to pro-

TO THE POINT:

For remaining old crop grain engage the market

Consider the risk of thinning liquidity for old crop grain

Old crop pulse (lentils & chickpeas) values jump considerably

New crop wheat values priced at premium over old crop due

to risk posed by dry conditions in SA.

Get organized to act on potential 15/16 opportunities.

14/04/15 This Wk Last Wk ChangeMay 15 CBOT Wheat $A/t $243 $255 -$12May 15 ICE Canola $A/t $475 $483 -$8APW Wheat

Port Adelaide $267 $274 -$7Port Giles $262 $269 -$7Wallaroo $255 $262 -$7Port Lincoln $262 $268 -$6Thevenard $241 $250 -$9

Feed BarleyPort Adelaide $275 $276 -$1Port Giles $273 $275 -$2Wallaroo $273 $272 $1Port Lincoln $266 $270 -$4

CanolaPort Adelaide $475 $487 -$12Port Lincoln $475 $487 -$12

14/04/15 This Wk Last Wk ChangeTWO WELLS

Nipper Lentils 2014 $1,110 $1,030 $80Field Peas 2014 $360 $360 $0

ADELAIDE PACKERNipper Lentils 2014 $1,150 $1,050 $100Field Peas 2014 $500 $530 -$30Faba Beans 2014 $600 $580 $20

14/04/15 This Wk Last Wk ChangeDec 15 CBOT Wheat $A/t $257 $269 -$12Nov 15 ICE Canola $A/t $471 $481 -$10APW Wheat

Port Adelaide $280 $288 -$8Port Giles $280 $287 -$7Wallaroo $273 $280 -$7Port Lincoln $280 $288 -$8Thevenard $268 $275 -$7

Feed BarleyPort Adelaide $265 $260 $5Port Giles $265 $260 $5Wallaroo $260 $255 $5Port Lincoln $265 $260 $5

CanolaPort Adelaide $493 $495 -$2Port Lincoln $493 $495 -$2

South Australia 2014/15 Track Prices

South Australia 2015/16 Track Prices

South Australia 2014/15 Delivered Prices

-40

-20

0

20

40

60

80

Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec

Pt Adelaide New Crop Wheat Basis2010 2011 2012 2013 2014 2015

A$/tA$/t



Victorian Markets

Wheat

In recent weeks wheat has seen an improvement in interest from buy-

ers mainly for local requirements (both end users and traders) which is

helping maintain support for local premiums.

In contrast to a month ago when it was still very much a buyers mar-

ket, there is a little more action on the bid side each day and less grain

being aggressively offered.

Growers remain slow wheat sellers which is helping in some regions

keep the wheat price steady against a volatile futures market. The major-

ity of demand continues to be for feed use which is keeping grade

spreads tight, but there has been an improvement in interest in high

protein wheat into the container market.

These higher protein markets are still trading below early season highs

which is keeping some sellers out of the market who want to see these

levels return before selling.

Trade demand into domestic mills and end-users is a reflection of

many end users finding the trade were more eager sellers than growers

when they have been looking to buy over the last 6 months. Rather than

execute stock many of these traders happily buy back in against their

sales if the price is right.

Not all exporters have domestic contracts and these buyers solely fo-

cused on export continue to be more focused on executing existing ex-

port sales or selling grain locally rather than buying more. Given the lack

of offers of grain on farm those buyers servicing the smaller consumer

market continue to be active in the ex-farm market although some of

these have bought nearly their years supply already due to expectations

it would be hard to accumulate through the year.

Barley

Track barley markets and delivered into Melbourne are steady but

upcountry markets remain firm due to overall tight stocks. A very high

percentage of system grain is sold by growers and some on farm barley

has also been priced.

Less barley went into storage this year due to the relatively high prices

at harvest, so buyers that traditionally accumulate direct from growers

are finding it hard to get offers at this point.

Due to dry conditions across much of the state, those growers with

unsold barley remain reluctant sellers especially those with their own

stock to feed.

This will change with the autumn break but who knows when that will

be. If it is delayed expect to see prices firm slightly (due to a lack of

offers) and vice versa. In a lot of cases ex-farm barley prices are trading

very close to what a number of buyers are prepared to pay for wheat.

Also supporting barley is solid export interest although upcountry pric-

es appear to have moved above these levels in recent weeks. Premium

malt prices are holding relative to feed (although there is very little un-

sold) but Hindmarsh pricing in a lot of cases is not better than feed bar-

ley or only a very slight premium.

Canola

Canola prices continue to take direction from the futures markets but

overall buyer interest continues to dwindle (evidenced by the depth of

buyers in the market). Growers continue to trickle canola to the market,

selling when we see short terms spikes but overall growers are getting

TO THE POINT:

Unseasonable rains during Indian pulse harvest support

domestic pulse values.

Place a firm offer to the market to avoid missing out on

opportunity if it arises.

Traders showing appetite by actively bidding for wheat.

Engage the market whilst appetite presents.

well sold. GM canola continues to be difficult to price at times but has

seen some improvement in the number of buyers looking at it in recent

weeks. It is still mostly larger exporters happy to accumulate tonnes in

the bulk handling system but there has also been some interest into

delivered to port options.

Pulse and legumes

Sub-continent focused pulses have continued their bull run in the last

10 days with both lentils and chickpeas significantly stronger in the last

week. As reported in last week’s newsletter unseasonably wet weather in

India has also potentially caused damage to pulse crops. On top of this

there are not many unsold old crop lentils and although there are a few

more chickpeas many of them are not the spec required by most buyers

or sellers still want higher prices so they are light in trade also. With such

volatile swings in pulse prices (have seen a few $100+ swings both ways

in the last month on lentils and $50 on chickpeas) having a firm target

price is important to avoid missing an opportunity.


Melbourne $279 $284 -$5Geelong $280 $286 -$6Portland $276 $281 -$5

Feed BarleyMelbourne $268 $270 -$2Geelong $268 $270 -$2Portland $265 $268 -$3

CanolaMelbourne $487 $499 -$12Geelong $487 $499 -$12Portland $472 $494 -$22

14/04/15 This Wk Last Wk ChangeMELBOURNE ZONE

ASW 2014 $292 $295 -$3Feed Barley 2014 $282 $284 -$2GM Canola 2014 $477 $475 $2Nipper Lentils 2014 $1,120 $1,120 $0Lupins 2014 $460 $460 $0Field Peas 2014 $510 $505 $5Chickpeas 2014 $670 $610 $60

GOULBURN VALLEYASW 2014 $282 $284 -$2Feed Barley 2014 $275 $275 $0Feed Corn 2014 $280 $290 -$10

WIMMERAFeed Barley 2014 $260 $260 $0Nipper Lentils 2014 $1,150 $1,100 $50Faba Beans 2014 $585 $585 $0



Feed BarleyMelbourne $268 $268 $0Geelong $267 $267 $0Portland $267 $267 $0


Victoria 2014/15 Delivered Prices

Victoria 2015/16 Track Prices




Feed BarleyMelbourne $268 $268 $0Geelong $267 $267 $0Portland $267 $267 $0





Queensland Markets


Queensland Markets

Wheat

Current domestic prices for wheat remain well supported in light of

recent rain over the Easter break and the downward trend in global pric-

es due to the positive production outlook for the coming season.

Ongoing consumer requirements is stabilising old crop bids around the

$320/t delivered Downs/Western Downs areas, however with little stock

on hand in Southern QLD, the interstate flow of grain is still being used

to satisfy local appetite.

Looking ahead, we should see planters start to roll here in the next

couple of weeks, with a number of growers in western districts looking to

put faba beans and oats in later this week/early next week, capitalising

both on the recent moisture and the early planting nature of these crops.

wheat/barley/chickpeas will be thrown in in earnest shortly after.

New crop multigrade bids this week have reflected some of the weak-

ness in futures markets (and the rain), coming off around $8/t to settle

at $312/t Brisbane Port Zone, while the domestic feed market was show-

ing bids of $307/t for Oct/Nov delivered Downs, which should return

decent on-farm equivalent prices should you have the on-farm storage

capacity to work into these markets.

With the 2015/16 global production outlook on track to produce anoth-

er large crop, and the time for weather to adversely impact production

fading it is difficult to make a bullish case for wheat from current values

unless an El Nino locally runs amok.

Barley

Old crop markets remain strong, pricing themselves on the back of the

firming domestic wheat market and garnering support from ongoing

strong sorghum bids. This week sees delivered Downs consumers bid-

ding $310/t for April/May delivered feed barley, with Brisbane port zone

numbers also at $310/t.

TO THE POINT:

Chickpea markets trading above public bids as appetite

increases on Indian uncertainty.

New crop hectare contracts present a viable option despite

discounts to standard forward MG contracts.

Chickpea

The chickpea markets’ upward trajectory has been spectacular of late,

with advertised bids piling on $50/t from last Wednesday, however rea-

sonable firm offers are reportedly being booked at numbers above the

market. Bids of $720/t delivered Darling Downs container packers and

$700/t Brisbane port zone have been available in the past two days for

Oct/Nov 15 delivery, with wet weather in the sub-continent hampering

wheat and chickpea harvesting efforts and reportedly adversely affecting

quality being cited as the catalyst for the rapid rise in values. Recent falls

in the Australian currency were also attributed with the lift in prices.

It will be difficult to quantify the extent that the wet weather in India

has affected their crops until better data is released in the coming weeks.

These forward prices are record levels which are usually reserved for post

-harvest, when we have known production issues, which is why we won-

der about how much of this new crop interest is speculative in nature.

Hectare contracts are still available, albeit not widely advertised and

usually at steep discounts to the fixed price contracts, however should not

be discounted due to their ability to lock in a greater proportion of your

crop should price pressure present itself later in the season due to either

the larger anticipated local production or the damage to the Indian crop is

found to not be as extensive as currently speculated.

Sorghum

Prices remain well bid considering harvest is moving into full swing,

however slow and steady grower selling and trade interest is helping

insulate bids from the weakness in US CBOT corn futures and a fluctuat-

ing Australian currency.

Chicago has lost around 10USc/bu from last Wednesday, with large

stocks being held by the grower in the US fuelling the bears’ argument for

lower prices. Although wet weather is hampering corn/soybean planting

progress and is offsetting the negative tone of the market.

Be mindful, however, that the American grower has the ability to plant

large areas quickly and won’t be hanging about once conditions become

favourable. Additionally, it is early and there is still plenty of time left in

their window too, and should be able to catch up soon.

Bids delivered Brisbane market zone fought their way higher to $315/t

this week, with prices of $295/t delivered Darling Downs and $305/t Bris-

bane port cone also being advertised.

Delivered markets are now usually on a May/June buyers call arrange-

ment while track contracts call for immediate transfer, which may prove

helpful for those with limited on-farm storage capacity or are looking for

some quicker cash flow.

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500

550

600

650

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Chickpeas Brisbane Port Track Equiv

14/04/15 This Wk Last Wk ChangeBRISBANE

APH2 2014 $337 $340 -$3H2 2014 $334 $337 -$3APW 2014 $327 $336 -$9ASW 2014 $327 $336 -$9Sorghum 2014 $315 $305 $10

DARLING DOWNSFeed Barley 2014 $310 $310 $0SFW1 2014 $320 $322 -$2Chickpeas 2014 $720 $670 $50Sorghum 2014 $295 $288 $7

TEXASFeed Barley 2014 $301 $298 $3SFW1 2014 $310 $310 $0

LIVERPOOL PLAINSFeed Barley 2014 $277 $277 $0SFW1 2014 $300 $297 $3

NEWCASTLEASW 2014 $300 $300 $0Canola 2014 $495 $510 -$15Sorghum 2014 $317 $307 $10

Queensland 2014/15 Delivered Prices

14/04/15 This Wk Last Wk ChangeMay 15 CBOT Wheat $A/t $243 $255 -$12May 15 CBOT Corn $A/t $192 $199 -$7APW Wheat

Mackay $289 $291 -$2Gladstone $293 $295 -$2Brisbane $318 $324 -$6Newcastle $302 $304 -$2

SorghumMackay $284 $277 $7Gladstone $284 $277 $7Brisbane $307 $294 $13Newcastle $310 $300 $10

Queensland 2014/15 Track Prices



New South Wales Markets

This has caused Indian chickpea futures to hit record highs. Our old

crop market responded to the uncertainty, with values jumping yesterday

to $740/t delivered Darling Downs and Narrabri. Some Bangladesh and

UAE buying also helped support the market. However with old crop all but

sold out procuring tonnage from growers is an ongoing battle.

New crop values have also rallied hitting $720/t Darling Down and

$710/t Narrabri/Dubbo. Hectare contracts are still available but very slug-

gish and lagging in values, to be bid at $655/t Darling Downs and $590/t

Narrabri.

Australia is expected to have zero carry out going into new season.

And although there has been a definitive swing to chickpeas at the ex-

pense of canola and wheat, there are still big areas of western NSW

which are not expected to plant this season. Hence add these renewed

Indian woes to our 2014/15 estimated balance sheet below and it is easy

to see why our market is gapping higher.

If you are still holding old crop chickpeas we feel it prudent to engage

the market by placing a firm offer at your desired target price.

Canola

New crop trade remains light, with traders trying to pull values lower

over the last week in line with the lower offshore market and rains in WA

and NSW in time for canola planting.

If you are considering forward sales, as we said last week, make sure

when considering forward sales to take a whole of business approach to

your forward marketing strategy. Just because you’re seeding canola

doesn’t mean you have to have sales on the book. Instead we feel it

prudent to focus on getting cover over a percentage of your expected

revenue.

Identify where the market is showing value and capture premiums

when they present rather than getting caught up in the hard decisions.

Sorghum

It’s been a bumpy road for sorghum over the last two weeks. Whilst

the market remains supported by Chinese appetite, uncertainty around

Chinese import protocols emerged in the lead up to Easter, unnerving

Australian exporters.

The success of Australian feed grain exports to China over the last 18

months has been partly thanks to export restrictions the Chinese govern-

ment imposed on US corn and DDG’s on claims of GM contamination in

export cargos. This behavior, whilst creating a wealth of opportunity for

Australian grains to fill the gap in the Chinese feed complex also served

as a stark reminder of how quickly regulations can change and the in-

credible impact this can have on grain values.

Leading into Easter questions arose over the types of import permits

required to import sorghum into China depending on whether it is intend-

ed for stock-feed use or processing (alcohol). The variation implied sor-

ghum intended for stock feed use would carry a nil weed seed restriction

for certain weeds, whilst sorghum for processing would not have the

same requirements.

This variation unnerved the market and the trade stepped aside caus-

ing values to fall as they evaluated the situation. The issues are reported

to have held up vessel loading in Brisbane and slowed container packing

as confusion reigned. As a result, track prices fell heavily in value as can

be seen in the chart below.

However at the end of last week and this week, sorghum prices have

managed to claw back most of the losses and packing and vessels look

to be improving.

It appears that the majority of exporters have the correct permit and

hence the issue may be temporarily resolved short term. Although there

is reportedly one vessel still sitting in the stem currently unable to load

due to issues with import permits.

The long term implications are that if we cannot achieve a nil tolerance

on these particular weeds or negotiate a more realistic import protocol it

may bring into question future trade with China.

Issues such as this remind us not to take Chinese appetite for

granted. Australian sorghum values, like feed barley are currently high-

ly reliant on Chinese appetite. Hence we seem to have a lot of our eggs

in the one basket. Any changes to regulations in China have the potential

to ripple through Australian grain values.

Chickpeas

Desi chickpeas have rallied since Easter, moving higher on a daily ba-

sis. Whilst leading into Easter saw little trade and a relatively steady

market continuing rain over North West India has led to harvest delays

and quality concerns for the Indian crop.

TO THE POINT:

Sorghum gets the wobbles as China import protocols come

into question.

Chickpeas rally as Indian weather dampens harvest.

270

275

280

285

290

295

300

305

310

315

320

Nov Dec Jan Feb Mar Apr

Newcastle Track Sorghum v Wheat

ASW

Sorghum

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Chickpeas Brisbane Port Track Equiv


Newcastle $302 $304 -$2Port Kembla $293 $295 -$2Melbourne $279 $284 -$5

Feed BarleyNewcastle $289 $289 $0Port Kembla $266 $268 -$2Melbourne $268 $270 -$2

CanolaNewcastle $489 $500 -$11Port Kembla $490 $501 -$11Melbourne $487 $499 -$12

SorghumBrisbane $307 $294 $13Newcastle $310 $300 $10

New South Wales 2014/15 Track Prices



Western Australian Markets

Are the Unwritten Rules of Selling Evolving?

If you’re a seller (whether it be grain, second hand field bins, or the

vacant corner block in Como), the aim of the game has always been to

signal to the market that what you have is in short supply in the hope

that this will drive the price up - Sorry for the Economics 101.

However in the grain market, it is important to also acknowledge and

understand the risks that buyers of our grain have to deal with. If we can

see what buyers are dealing with, we can potentially position ourselves to

take a little more money off the table. So how?

First some more background. The WA canola market is quite different

to any other, as the demand for West Australian tonnes can drop off a

cliff face once other markets start to deliver new crop elsewhere in the

world; Europe in June/July and Canada in August September. This means

that if canola isn’t exported from WA before May/June it potentiall won’t

leave our shores until the start of harvest later in the year. As a result it

can be very costly for a buyer to accumulate and pay for grain now if

they’re not expecting to ship that grain until December.

Therefore growers and buyers alike are constrained by rigid timeframes

to trade and export canola. If a trader agrees to buy 50,000t of canola

for a customer in March, for shipment in June, the risks are as follows:

1. Is there 50,000t available to buy in that port zone?

2. What price will growers sell at?

3. How long will it take to accumulate 50,000t?

4. What is the likelihood of being caught with half a shipment?

In the past few weeks we have seen several buyers inquisitively ask for

an indication of canola tonnes unsold and target prices for these tonnes.

Buyers seem to be trying to determine if there is enough tonnes at a

profitable price available to put together a shipment without the risk of

being caught short for 9 months with half a vessel.

The buyer has to see that there is reward for the risk buying. If grow-

ers are willing to share their inventory and price targets to qualified buy-

ers the probability of selling remaining canola at an ok price is increases.

The risk to the grower is if a buyer loses confidence to accumulate and

withdraws from the market, and consequently there is less competition

for remaining tonnes out there.

Hence whilst buyer appetite is still present make a firm offer to the

market, communicating your unsold position, how much you have, where

and at what price you’d be a willing seller. This information could be the

difference between an exporter putting another sale on the books or not.

If you’re not sure how to do this you can

1. Communicate your target price to your broker or consultant.

2. Communicate your target price direct to select traders.

3. Place a firm offer on Clear Grain Exchange at your target price and

communicate your price to the market.

TO THE POINT:

Opportunities to make canola sales this season may be di-

minishing as northern hemisphere new crop approaches.

Engage with the market whilst opportunities present.

14/04/15 This Wk Last WkMay 15 CBOT Wheat $A/t $243 $255 -$12May 15 ICE Canola $A/t $475 $483 -$8APW Wheat

Geraldton (FIS) $313 $312 $1Kwinana (FIS) $309 $312 -$3Albany (FIS) $297 $302 -$5Esperance (FIS) $310 $314 -$4

Feed BarleyGeraldton (FIS) $284 $291 -$7Kwinana (FIS) $305 $299 $6Albany (FIS) $295 $293 $2Esperance (FIS) $296 $294 $2

CanolaGeraldton (FIS) $485 $485 $0Kwinana (FIS) $500 $503 -$3Albany (FIS) $500 $503 -$3Esperance (FIS) $512 $506 $6

14/04/15 This Wk Last Wk ChangeDELIVERED PERTH

APW 2014 $302 $300 $2ASW 2014 $300 $300 $0AGP 2014 $300 $300 $0Feed Barley 2014 $285 $288 -$3Field Peas 2014 $410 $410 $0Milling Oats 2014 $332 $329 $3Lupins 2014 $355 $355 $0

DELIVERED BUNBURYAPW 2014 $298 $305 -$7Feed Barley 2014 $304 $304 $0


Geraldton (FIS) $291 $305 -$14Kwinana (FIS) $290 $304 -$14Albany (FIS) $287 $301 -$14Esperance (FIS) $288 $302 -$14

Feed BarleyGeraldton (FIS) $273 $270 $3Kwinana (FIS) $281 $276 $5Albany (FIS) $279 $272 $7Esperance (FIS) $275 $272 $3

CanolaGeraldton (FIS) $507 $516 -$9Kwinana (FIS) $507 $516 -$9Albany (FIS) $507 $516 -$9Esperance (FIS) $507 $516 -$9

Western Australia 2014/15 FIS Prices

Western Australia 2015/16 FIS Prices

Western Australia 2014/15 Delivered Prices

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520

540


WA Canola Values

ICE May 15 Kwinana Albany Geraldton Esperance

0

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Oct Nov Dec Jan Feb Mar Apr May

WA canola stemactual and scheduled exports

kt

acc piece.pdf

Documents

forward market

nzx agriadvisors pty

agri advisors group

nzx agri advisors afs

barley strategy

canola strategy

marketing strategy

unsold old crop grain