World Supplies versus WA Supplies

Posted in June 2016 - in

We have been talking for the last two years about the increase in world production of all grains.  Wheat has been increasing from a world supply point of view for the last three years.  Most countries have had reasonable to good harvests and this has pushed the stockpiles up.

Consumption has been under production and this simply means we have an increase in ending stocks.  This scenario is good for avoiding shortages of grain and allows many people in third world countries to be feed.  Unfortunately, from a selling point of view this causes prices to diminish as no one is going to pay high prices for something of which there is plenty of.

Each year we look for the country that will fall over from production issues which will thereby increase demand for these commodities.  This year is no different but most countries are again shaping up for a reasonable crop.  There may be some changes in the second half of the year but from where we sit now, production is looking reasonable.

WA is shaping up, so far, for an average too extremely good crop potential.  The main areas of concern to date have been too dry in the north eastern zones of the Geraldton zone and some small areas along the south eastern coast which have had too much rain.

Pricing so far this year has been lacking any excitement.  Many prices have been travelling in quite low percentile ranges except Canola which is looking quite good.  Will this change?  Well you could say that production is a key factor in price determination and when you look at the world situation there is no shortage as we have stated.  Maybe domestic basis will support prices locally?  Right now you would estimate that WA production will be well supported and therefore local basis will likely not be tested or pushed too high levels.

To achieve an average price this year you will have to be on your grain marketing game.  Opportunities may be short, sharp and could also be hard to spot.  One tip we can pass on is that local buyers (WA) will still need to buy grain and are doing so already.  To a local buyer this is taking risk off the table for them and securing known grain which assists in organising shipping and international sales in advance.  So far this year opportunities have come when price holds low for a while then the market improves slightly.  The buyers then aim to be the first buyer to meet the magical numbers (round numbers like $280/t etc).  They have pushed to meet these levels and you will notice that basis increases for that day.  There have been limited opportunities so far.

As a grower you know how hard it is to sell all your grain at good numbers so keep in mind this year that pricing opportunities will need to be more frequent if you end up with higher yields.  Alternatively you need to increase the tonnage commitments per pricing point to cover the possible extra tonnes.  This is a hard thing to do as we all get stuck in selling patterns but remember that your selling strategy needs to reflect the current year not copy what you have always done.B

Be prepared to act when opportunities may come after June and onwards.  Don’t get caught pricing only in the start of the year, be prepared for the second half of the year.

Finally remember that the cost of a grain marketing consultant can be offset in one transaction.  Most of our growers do not have time to access the markets each day, monitor prices, check basis levels, and finally negotiate the absolute best price achievable on the day.

As the Phantom says “Sometimes you need the strength of Ten Tigers to achieve this”




What our customers have to say
We decided to engage the services of Ten Tigers because we found we were becoming increasingly overwhelmed by the grain marketing decisions we had to make. We were sometimes making poor decisions because we had become indecisive and didn’t have clear target prices in place. We have found the staff at Ten Tigers an absolute pleasure to deal with. They are proactive in keeping lines of communication open and the paperwork they provide us with is easy to understand and very useful. The advice Ten Tigers has provided exactly what we needed. They have helped us set and reach targets and we have already seen the benefits of the grain marketing strategies they helped us put in place.
Ten Tigers has been my grain marketing advisor now for a period of 12 years. I have entrusted Chris Tonkin and his team to assist and direct me in the selling of my grains to suit my needs. With their experience, knowledge and regular contact and updates, I have been able to concentrate on the physical and practical side of farming without the added stress of watching the markets and possibly making wrong decisions. Allowing Ten Tigers to be my “personal broker” has put me in a position where I can relax, travel and profit from my every day farming life.
Ten Tigers has helped our grain operation grow through a well-balanced marketing program of all our grain types in the current season and beyond. Ten Tigers has given me a greater understanding of our grain business through a fully transparent summary at the completion of each marketing season. Ten Tigers has given our business confidence to expand grain production by allocating achievable pricing target levels on all our grain types. Our business can better allocate time towards the production side knowing that Ten Tigers is managing our marketing in a professional, unemotional manner.
Ten Tigers is a business that specialises in grain marketing and consulting. We use Ten Tigers to help us achieve the best price for our grain, to find out what is happening in the world’s grain market to date and to help with marketing strategies. The best thing is, all this can be achieved by just a few text messages per day and / or a quick phone call while I stay busy growing as much grain as I can. I find them a great deal of benefit to our grain farming business.
In the ten years we have been working with Chris and his team there has been a huge transformation in grain marketing in our business. Ten Tigers has made these steps a comfortable journey instead of the hill climb they appear to be when we receive correspondence from all different grain identities and our legal obligations we need to meet. Ten Tigers has assisted us to achieve higher daily prices regularly with good communication and sound advice. Ten Tigers has been an important member of our business allowing us to concentrate on growing our grain with the knowledge that Ten Tigers is there to worry about the marketing, optimisation and filling of contracts. The very detailed information that is supplied to us makes record keeping and entering g details into our accounting program very simple and quick.
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