PATIENCE will be the key for farmers looking for a substantial rise in grain prices according to Callum Downs commodity analyst Malcolm Bartholomaeus.
Subscribe now for unlimited access to all our agricultural news
across the nation
or signup to continue reading
He said there was some nascent signs the downward trend in cereal grain prices could end by the middle of the year but added this would be reliant on the string of markedly above-average northern hemisphere seasons coming to an end.
“The International Grains Council (IGC) has projected a 17 million tonne drop in global wheat production, with lower plantings in the US a key driver,” he said.
“Whether that occurs or not, we’ll have to wait until more is known about northern hemisphere production.
“By late June the market will be responding to actual data from the northern hemisphere, the IGC expectations are based on no more bin bursting seasons in Europe and North America.”
“Early signs are that Europe has had a more severe winter than the past two years, which were very mild, which means the crop does not have that head-start moving into the growing season, which is consistent with estimates of lower yields.
He said if the IGC numbers were on the money it would mean stocks would tighten significantly outside of the two major grain stock pile holders, China and the US.
Mr Bartholomaeus said he expected some farmers would hang onto grain, punting on the potential for an increase in price, but added it was a speculative move.
“We have seen last year the price does not necessarily move up heading into the Australian autumn, so while with large volumes about, farmers may choose to hold onto some grain as a hedge looking for a price lift, it would not be something to recommend over their entire crop.”
He said growers were also looking at pools as a means of getting access to a later-season rally in prices.
Mr Bartholomaeus, who is also co-owner of pool operator Avant Agri, said there was interest in pools from people unwilling to sell at current values but wanting a cash advance.