Grain Marketing (November 2012)

Grain Marketing

In recent years, many growers have adopted a simple marketing strategy of pooling some grain, cashing or contracting some grain, plus storing a small proportion.

It is unlikely this strategy will change in 2012, other than the breakup. With current prices being well above the long term average, selling, or at least pricing most grain at harvest would seem sensible.

There is speculation within the market that basis may strengthen into 2013, providing some strong selling opportunities. This may be the case, but it is not guaranteed. A cautious approach to storing large quantities of grain is prudent, given the current above average prices on offer.

To manage cash flow, there have been some early commitments to pools. An alternative approach to manage cash flow, is to contract grain with a deferred payment. Doing so will lock in the price, but defer the income to the next financial year, for those who operate on cash rather than accrual accounting.

Contracts & Delivery

When contracting grain, it is important to be aware of specified or excluded delivery sites for some or all grades.

There have been a number of instances where grain has been contracted under the assumption it could be delivered to a certain site, only to find that the buyer is not taking grain at that site.

Similarly, grain to be warehoused needs to be at a site where some or all of the major buyers are likely to be buying throughout the year.

Broadly speaking, the industry has moved to quoting prices on a site basis. For contracts that are taken out on a port pricing basis, applicable freight rates need to be known and written into the contract. Many buyers have preferred sites with competitive freight rates and non preferred sites where freight rates are higher. It should not be assumed that GTA freight rates will apply in all cases.

Sourcing Price Information

Accessing prices and managing grain sales has become a lot easier with Smartphones and Tablets. In particular the Profarmer Live site and the GrainCorp app will simplify the pricing and transaction process.

Profarmer Live – this facility is accessible as part of a subscription to the Profarmer Grain Newsletter. It provides prices on a site basis at all delivery sites and is updated several times daily.

The annual subscription is approximately $900.

GrainCorp app – this Smartphone app provides access to pricing, plus management of grain in warehousing including transfers to contracts.

For those delivering to a GrainCorp site, this app along with the Profarmer Live facility, will make accessing information and managing grain sales in a timely fashion easier.