export records without single desk

[malleefarmer]

VITERRA has exported more grain in the past six months than is normally despatched in a year.
The company said yesterday that it had shipped more than 4.3 million tonnes between December 2010 and May 2011, compared to average annual shipments of 4.3 million tonnes in the past 10 years.

Viterra's South East Asia president Rob Gordon said the result highlighted the strength of the South Australian grains industry.

"Since harvest began last year, the shipping program has been very strong with records continuing to be broken," he said.

"Even during harvest we were shipping large amounts of grain, which is noteworthy considering the sheer size of the crop coupled with the unseasonal wet weather late last year."

Viterra loaded 32 vessels with grain from its ports in May with Outer Harbor, its newest port terminal, achieving record monthly shipments and Port Lincoln the second best figures ever.

Mr Gordon said 14 exporters had accounted for the record shipments during this six month period with more than two thirds shipped by exporters other than Viterra.

It compares to three years ago, when there was only one single-desk exporter of bulk wheat.

Mr Gordon said Viterra expected shipments to remain strong given the significant crop in storage, the favourable commodity pricing environment and strong demand.

Since entering the Australian grain industry in 2009, Viterra has invested more than $35 million in infrastructure to improve the operation of SA's export supply chain for the benefit of growers, exporters and customers.

"As a port terminal operator, Viterra's strongest incentive is to maximise throughput," Mr Gordon said.

"This is how the company obtains a return on its significant investment in South Australian infrastructure.

"Our commitment to doing so is demonstrated by both the level of its continuing investment and the record tonnages that it has moved through its system."

Mr Gordon said it was also working to facilitate movement of grain from next harvest.

[malleefarmer]

Also is the fact if it was single desk grain it would be only about 30% sold by now and open to price falls which have happened.

But dont get me wrong pooling is alive and well in australia in fact a lot of high protien wheat was pooled and is doing very well price wise.

And 14 exporters you guys would be happy half that i would suggest and note viterra who had the single desk are still surviving in fact flourishing

[gregpet]

Vader, agstar any comments?

[Burbert]

Duhhhh! Guess what, grain sales are
proceeding well, EVERYWHERE. Right now.
Its only when times are tough, that you
kin see where the bear sh-t in the
buckwheat patch.........

[wmoebis]

malleefarmer I have a couple of questions.

1 When do you have to decide if you are going to your wheat?

2 Once it is pooled can you with draw and sell out of pool?

3 Do you contract for pool and/or non pool by quality or quantity? What helps you decide what to contract with who?

4 How does your malt barley work for contacting, price setting and delivery?

[wmoebis]

Sorry, 1st question should have going to pool your wheat?

[malleefarmer]

wmoebis do i pool wheat yes.
First im a average grower maybe slightly above 4000 acres wheat 600 acres oats and 700acres canola.
i usually hoper for 2600-3000 t wheat sometimes more sometimes way less.

The market peaked here for 2011 wheat in feb about feb 8th-10th i think $340 port price which equates to $300/305 on farm for apw wheat 10.5% protien, that also was a multi grade price h2 ans h1 wheat higher protien and gade were 40 and 25 a tonne more and asw 10$ cheap gp1 cheaper again with a discount of $60 for feed wheat all on same contract.

I made sales at $320 and my next target was $350 port to make sales but it never got there.My rule of thumb is never foward sell more than 35% of my expected production.

once harvest starts grain is warehoused at the local elevator and you keep your eye on prices and sell on the spikes. Some guys have wheat still unsold.

One studies all the relevant pools and expected returns during harvest and can be commited to pools usually up till end of jan when most are closed and a new lower return pools anre opened.

two lines of thought grain can be pooled with a company and/or farmers can sit on the re own grain and sell over the next marketing thus running there own "pool"

Most pool operators offer premium of up to $20 to sigh early in pools ie in march april for the next harvest in nov. Some companies also offer cash drawdown on this contracted grain during the year despite the fact its still inthe ground ground growing.

Once grain is pooled you cannot withdraw the grain. The contacted premium pooled grain is subject to washout payment if you fail to deliver due to production issues.

At a guess i would think most farmers here a either have cash sales during year and at harvest 50%, cash sales after harvest 25% and and 25% pooled either premium or harvest pools.

Alternatively some guys cant be worried about cash prices and put all there grain in various pools some are express payment paid out within 6 months,some paid every quarter some 3 payments over 18 months and other pools over cash draw down of 80% of estimated pool return.

Others sell 100% cash during harvest.

bubert is right sales are strong but if we still had single desk only one would doubt if sales and shipping would be as stong.

Really interesting what you guys are going to come up with, whatever you decide to all the soothsayers the sun will still come upin the morning in a deregulated market and the 30 or so registered buyers/traders/pool operators in australia are not the devil reincarnated, its up to the farmers to make there own decisions if its too hard just pool it as many do

[malleefarmer]

Malt barley exactly the same pools and cash throughout year and harvest. But cash is usually king in malt barley mareket

[wmoebis]

Thanks Mallee;

More questions if you don't mind. You say you deliver right off combine to elevator. How do you decide what elevator, grade, service, space availability or proximity to farm? Is there a diff between what the graders grade for pooled grain and cash grades? Elevator companies?

Here we take harvest samples to all the diff companies and sometimes diff elevators within one company. We shop for the best grades, protein and handling agreements. Then we haul to where ever it suits us.

This causes a big problem at harvest time for our buyers as they have thousands of samples it a narrow window and are grading samples, competing against other elevators owned by the same company. One may end up taking his same samples to six or seven diff elevators and only deal with one in the end. They will tell us what on farm storage bins we can haul and when.

This may look good for the producers but it is not so good for the grain companies. A lot of work for employees looking at thousands of samples that they may never see again and at times looks bad for Co's as there are grade diff between elevators. We used to take samples of our bins that we wanted to haul and shop between local elevators however now our grain companies seem to want to see all our production then deal on all or nothing. Don't get me wrong there is execptions but on the whole this is the way they would like it.

Our Malt program is a little diff. A grain company or malt selector will not even look at our barley samples unless we sign a contract first. This reduces their work load of assessing barley that will not be delivered to them. For the farmers we have no chance of shopping for better delivery deals or competing between more selectors or companies. Once the malt is selected it is up to producer to maintain quality if we something happens and it doesn't meet quality on delivery it is sold into feed market.

Is this much like how your malt system works? I wasn't clear on if you store it farm or deliver right off combine and what happens if it doesn't meet spec on delivery.

[charliep]

wmoebis

You describe the situation as it exists today and quite potentially will
remain in an open market. You have highlighted in Agriville over time
the importance of farmers knowing their grade via solid sampling and
getting independent grading (submit CGC and perhaps someone like
SGS). Then you can shop elevator companies from a point of strenghth
and not hope. Everyone likes to play the blending game (farmers and
grain companies) but the first requirement is for everyone to know what
they are dealing with. I would argue this is not a CWB issue (if anything,
the CWB is a negative factor in these comments in that their prime
concern is the allocation of grades/proteins for purpuses).

On the malt, the requirement to deal with only one company at a time is
a requirement for CWB contracts - not a selector one although they may
like the ability provided in the contract. You have to sign a CWB contract
which gives the selector exclusive opportunity to review for a given
period of time. My experience in real life is that it is good to have a
consultant working with a farmer who has a good understanding of malt
attributes, can grade on your behalf and can match what you have with
specific maltsters and exporters requirements. Lot less grief and
hit/miss than having a farmer try to guess on their own.

I suspect malt barley selection process will be cleaner in the new world.
It will remain a specialty crop so going nose to nose with buyer (read
selector) in the process will benefit most farmers. Price signals will be
direct with no filters.

Way off topic but the Schmitz/Schmitz barley study suggests Alberta
farmers would sell malt barley at a $10/tonne discount to the domestic
feed barley (based on rock bottom elevator bids in the Red Deer region).
An interesting study but you need to read in full including the
assumptions. Also interesting to see how the authors address the
different CWB barley pricing programs. Light summer reading for the
lake. Off topic - sorry.

[malleefarmer]

re grading no its all the same all elevators grade the same.
protien moisture and sceenings and bushel wieght.

not all elevators take all grades but im lucky my local takes all the grades of wheat i grow.

pools pay increments for protien mostly some pool operators pay for lower moisture and screenings.
wereas cash is cash so sometimes once your grain is delivered you have to work out were to sell it,ie high protien low moisture low screenings wheat can be worth more in a pool than flat cash when you add up payments for the foremntioned quality parameters,but sometimes a load of wheat may make top quality by the barest of margin .1% for protien ie 12.5% then that may pay to sell for cash but if it was 13.8% protien may pay to pool it.

[charliep]

malleefarmer

Just checking on something. Australian farmers have less on farm
storage so more deliveries off the combine delivery to terminal. I
suspect limited ability to blend borderline grades. Here in Canada,
lots of on farm storage and grade variability. Everyone blends or tries
to play the game with varying levels of success.

You also have the ability to maintain ownership in a grain companies
facilities via storage tickets, warehouse reciepts, or some other tool.
You can sell your grain to other buyers other than the owner of the
terminal. Have I got it right?

Wheat ownership in the primary elevator and access to delivery
opportunity will be one of the discussions as things move forward to
an open market.