AUSTRALIAN grain growers can expect another year of high volatility on the marketing front, as the market reacts to pricing signals throughout the year.
And Aussie farmers could do worse than to explore the option of insurance to protect them from price and exchange rate swings, according to one grains consultant.
Negative responses to growing wheat in northern hemisphere countries have increased the probability of more price volatility said industry analyst Robert Rees, meaning Aussie growers will have to monitor the international market more closely than ever before.
“Australian wheat growers will also have to pay more attention to international wheat, corn and soybean markets than they did before,” Mr Rees said.
He said the trends in 2009-10 would be less obvious than thos of 2008-09, where prices dropped due to the global financial crisis and excess stocks.
“The global financial crisis together with the global grains surplus at harvest saw their prices collapse from the moment their grain went in the ground.”
While Australian wheat was fetching up to $450/tonne this time last year, Mr Rees said the response to record wheat prices around the world was unanimous and this response had driven the price down.
“Every major exporter except Argentina and Kazakhstan had significant wheat production recoveries in 2008-09,” he said.
“The United States has produced 12 million tonnes more wheat this year, and its stocks are expected to more than double.
“Canada is expected to produce an additional 8.6 million tonnes of wheat, while the 27 countries of the European Union are expected to produce an additional 31 million tonnes."
Overall, in January the US Department of Agriculture forecast world wheat production at 683 million tonnes, which is an increase of 73 million tonnes.”
Mr Rees said the world trade in barley was expected to rise to a record 19.2 million tonnes in 2008-09.
He said while there were production increases in Australia, our barley exports were expected to fall as the Ukraine, Russia and the EU had all increased production significantly.
“The fall of the Australian dollar has partly cushioned Australian growers from lower prices,” he said.
Mr Rees said the long-term future looked brighter as global grain usage was expected to rise by 300 million tonnes, or 15pc, over the next eight years.
He said while the market was currently digesting a world record wheat crop, the 2009 crop would struggle to match it and world stocks remained relatively tight.
“World demand is currently firm, with most of the business going to Canada, Australia, Europe and especially the Black Sea region,” he said.
Mr Rees said a key lesson to be learned from the experience of Australia’s first season under deregulation was the need for timely, accurate information.
“Growers’ information requirements need to be examined in more depth,” he said.
“Cash prices were not available at silos on some days, which caused confusion.
"It is difficult for growers to obtain the necessary detailed information on their likely net prices at the silo from so many buyers without trawling through individual websites.”
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