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Cash prices in the Geraldton zone with a “very” dry start

Posted in July 2017 - in , ,

Well to start with we are not seeing a lot of crop out of the ground. This is the greatest risk so the focus needs to be on production first. If you do need to seriously consider washing out a contract we do recommend getting the conversation started now not closer to harvest. It pays to fully understand the process and the options available.

Buyer demand has increased prices in WA significantly throughout June. Unfortunately growers in the Geraldton and Kwinana zones are unable to take advantage of this due to production issues.

Chart 1:  2017/2018 Wheat basis for APW1 prices in Ger (AUD/t)

This chart shows how the current dry conditions in WA have pushed wheat basis (buyer demand) to new highs in recent weeks.  The increase is substantial and it shows that buyers are getting nervous and know that they need to increase prices if they want anyone to commit to selling.  It is important to remember they do all have long term commitments for shipping out of WA.

We certainly think it is prudent to do nothing in most circumstances in the Geraldton zone right now, but please remember that every circumstance is different. If Ten Tigers knows your business we can give good advice.

Minneapolis (MBOT) December is trading around a 240 USc/bu (30th June) premium (AUD$100/t+) to the Chicago December (CBOT) equivalent.  This premium is big on account of a drought in large parts of the Dakotas and Minnesota. The average spread for this December pair (since 1991) is about 34 USc/bu (AUD$16/t). The premium was last around these levels in 2011.

There is definitely potential for this spread to grow further which is a good sign for higher protein wheat towards harvest this year. We are targeting buyers to increase spreads for H2/H1. These are significantly different between buyers so be aware that base prices on text message that look good are not necessarily best for your business.

International wheat values at tender are still not rallying much with Romania and Ukraine still supplying to GASC in Egypt. Values are as low as AUD$275/t CnF.  Our local cash price action is purely due to a lack of rainfall and therefore lowering production potential.

Chart 2: MATIF Canola futures v NONGM cash price Ger (AUD/t)


Local WA basis for Non GM & GM has also gained. The continued dry conditions in the north and east of the state have been worrying traders (and Ten Tigers clients!). There have been numerous grower washouts of canola contracts which impacts on market liquidity as buyers try to determine replacement costs of grain.
Values do look like they are settling internationally. The weather premium for Soybeans and Canola in the US and Canada is disappearing as supply looks reasonable. The local focus in WA though is different and is firmly on supply. This is keeping basis levels attractive for Canola and should do for a while yet.


There is not much liquidity in the barley market at the best of times. At the moment we believe marketers should be starting to get a little concerned about potential malt production in WA this year. This could well push malt premiums higher. There is limited Malt opportunity in Geraldton with only La Trobe and Scope likely to get segregation this year.




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 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.
In the seventeen 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  details into our accounting program very simple and quick.
Ten Tigers has been my grain marketing advisor now for a period of 17 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 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.
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