Australian grain very competitive but execution is difficult

Aussie wheat and barley remain very well priced into Australia’s major international demand hubs, so there is plenty of demand for Australian grain.

The challenge for many buyers currently however is making sure they have enough access to the respective supply chains to execute.

Saudi Arabia’s main state grain buying agency, the Saudi Arabian Grains Organisation (SAGO), recently tendered to purchase barley.

The results released on March 8 showed SAGO purchased 660,000t of animal feed barley at an average price of US$279.77 per tonne on a cost and freight (C&F) basis delivered to their Red Sea and Arabian Gulf ports. Prices ranged from US$277.00 per tonne to US$285.70 per tonne (refer Table 1 showing a full list of results from the tender).

Bids to growers at the same time around Australia converted to a US$240-250 per tonne price on an equivalent C&F Saudi ports basis (refer Table 2).

Hence Aussie barley is still very very competitive versus other exporters by US$30-40/t depending on where you are in Australia and accounting for some volatility in international bulk sea freight rates which are volatile and rising.

The reality is much of the barley that will be used to supply these tenders would have been accumulated by merchants earlier in the year. The discrepancy in spot prices is much larger than normal however.

Part of this can be explained by some traders having difficulty trying to access more of Australia’s grain and push it out to the international market. This is evidenced by the high likelihood that some of the recent SAGO tender will be filled by barley from other origins, such as the Black Sea, despite our low prices when compared with them on an equivalent basis.

Most of Australia’s supply chains are running at capacity, albeit that there is room for improvement in some areas of Australia, and international container markets and bulk freight markets are proving volatile and difficult to navigate.

However, part of the price discrepancy can be explained by growers not being informed of these values and easily able to compare what they are receiving versus what prices grain is trading around the world.

This article aims to help with that.

There are plenty of buyers interested in buying your grain. Make sure you have it on offer at the price you want on an independent grain exchange so ALL BUYERS can try and buy it and help ensure your grain sells at its FULL VALUE.

Interestingly the average price of the last SAGO tender on Jan 25 for 660,000 tonnes was US$277.65 per tonne. So, barley values have gone up slightly in Saudi Arabia since our harvest.

For more information please contact Clear Grain Exchange on 1800 000 410 or support@cleargrain.com.au