Once again South Australia has the lowest grain prices in Australia. It may be a function of our export supply chain cost structures, restrictive systems for traders trying to operate within South Australia, a lack of grower pressure from limited on farm storage, and a limited domestic market applying pressure to the trade. It may also be a systemic failure of the whole market in Australia.
The Portland zone in Victoria is closest in nature to the South Australian market. This week Portland wheat prices were $12 per tonne higher, canola prices were $6 per tonne higher, and feed barley prices were $7.25 per tonne higher. The spreads to Melbourne, Port Kembla and Newcastle prices are significantly larger, as are those to Western Australian prices.
Relative to Portland, the current prices spreads are similar to the average seen since the beginning of November, so lower prices in South Australia have been a feature all season.
In terms of access to global markets, South Australian ports are the most isolated of any Australian ports, but that should not account for the large price differentials we see. In any case, apart from Pacific destinations, Victorian ports are just as isolated.
The lack of a large, sometimes dominating, domestic market in South Australia will have some impact, but in a properly functioning market, local endusers should pay just above export parity to secure grain, and if prices get too high in some port zones, exporters should shift their attention to South Australia, thus keeping all prices at similar levels.
Just maybe the Australian grain market does not function properly. Maybe exports cannot move easily from one origination to another within Australia. Also, just this week, ABS published data where they say the 2016/17 wheat crop in Australia was just 30.36 mill t, not the 33.5 mill t assumed by the USDA, or the 35 mill t claimed by ABARES.
Maybe that explains why NSW prices moved so high during 2017, and have stayed there. How can a market function when no-one has any idea on supply? When 3 reporting agencies are at odds with each other.
The Portland zone in Victoria is closest in nature to the South Australian market. This week Portland wheat prices were $12 per tonne higher, canola prices were $6 per tonne higher, and feed barley prices were $7.25 per tonne higher. The spreads to Melbourne, Port Kembla and Newcastle prices are significantly larger, as are those to Western Australian prices.
Relative to Portland, the current prices spreads are similar to the average seen since the beginning of November, so lower prices in South Australia have been a feature all season.
In terms of access to global markets, South Australian ports are the most isolated of any Australian ports, but that should not account for the large price differentials we see. In any case, apart from Pacific destinations, Victorian ports are just as isolated.
The lack of a large, sometimes dominating, domestic market in South Australia will have some impact, but in a properly functioning market, local endusers should pay just above export parity to secure grain, and if prices get too high in some port zones, exporters should shift their attention to South Australia, thus keeping all prices at similar levels.
Just maybe the Australian grain market does not function properly. Maybe exports cannot move easily from one origination to another within Australia. Also, just this week, ABS published data where they say the 2016/17 wheat crop in Australia was just 30.36 mill t, not the 33.5 mill t assumed by the USDA, or the 35 mill t claimed by ABARES.
Maybe that explains why NSW prices moved so high during 2017, and have stayed there. How can a market function when no-one has any idea on supply? When 3 reporting agencies are at odds with each other.