THE team at a leading grain exchange believe there is scope for local grain prices to rise higher due to where Australian prices sit on the international stage.
Nathan Cattle, Clear Grain Exchange (CGX) managing director, said growers, especially on the east coast, had been willing sellers, due to good yields, which had sustained the trend of Australian grain being the cheapest in the world.
"Australian grain values have been the cheapest worldwide for some months, because many growers have been comfortable sellers at values bid to them," Mr Cattle said.
He said many farmers had experienced the pleasant problem of crop yields exceeding pre-harvest assessments, and as such, given prices were above long term decile 5 levels, they had made the decision to sell immediately.
Mr Cattle said he felt Australian wheat was too cheap, even allowing for the need to win market share internationally.
"Australian grain does not need to be $20-30/t cheaper than its nearest competitor to win offshore demand, which has been the case into many markets in recent months," Mr Cattle said.
Tom Guthrie, national business development manager with CGX, said east coast grain in particular presented opportunities.
He said in recent weeks buyers had started to recognise the value in grain at current prices and were looking to start owning the crop in spite of the fact export slots are hard to come by.
"There has been a bit of a shift in the dynamic, which reflects the opportunities that will appear," he said.
Mr Guthrie said Australian wheat and barley was far and away the cheapest option on a free on board (FOB) basis in US dollar terms to a range of markets, not only including our freight advantaged neighbours in south-east Asia but into the Red and Arabian Seas.
"Western Australian prices are very competitive, but east coast values are cheaper again," Mr Guthrie said.
Mr Cattle said current prices factored in the cost of carry too heavily.
Many growers wanting to sell grain quickly have been hammering values lower as they are effectively paying grain buyers to carry their grain for them into months when it can be shipped, plus some," he said.
He said the current prices reflected the logistical constraints within the Australian grain export supply chain.
Australia can only ship a certain amount of grain each month, hence if growers want to sell more than buyer demand, Australian values get discounted," he said.
And he said this was bad news for growers as it created a vicious circle, especially if, as is the case now, Australia is one of the most important suppliers of wheat on the world market.
"When Australian values are dragged down it flows on to pull the global price lower.
"Many commentators note that CBOT wheat has weakened in the last month, which is partly attributable to lower Australian grain values."
He said a slower pace of selling from Aussie growers would ensure prices did not erode.
"Australian growers should know that their behaviour is having a large impact on prices they receive at the farm gate," he said.
He said offering grain at a nominated price, such as happens on the CGX, gave growers a chance to set the agenda.
"There are plenty of buyers looking, last week there were 22 buyers on CGX, with more searching for grain on offer," he said.