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Growers have pricing power!

Peter Brennan and Nathan Cattle from Clear Grain Exchange believe growers have a choice to offer grain for sale to all buyers at the price they believe is fair value.

The reality is Australian growers have likely never had this much pricing power in global grain markets before. Yet prices bid to growers have never been this far discounted when compared to global values.

That’s the market scenario we find ourselves in currently.

The world needs Australian grain because they can’t get it readily from elsewhere in the world due to production issues over the past year.

This is not likely to change until the northern hemisphere crops become available which for the majority is the middle of next year.

This means Australian grain is setting the global price.

Yet as numerous analysts have commented on over recent months, current prices bid to growers are well below international values on an equivalent basis.

Further this discrepancy in price is quite possibly as high as it has ever been. The price growers are receiving for their grain has likely never been cheaper versus global values.

So what’s going on?

There has been plenty of commentary about supply chain access, funding constraints by buyers, a changing quality profile of the Aussie crop due to wet weather, as contributing factors towards disconnecting the price bid to growers from the international market.

But the simple fact that growers have been willing sellers at the prices bid to them, is the largest reason creating a cheap grower bid when compared to global values in my view.

It is the buyers right to act commercially, like any business, otherwise they don’t survive long term. This means if their advertised bids keep getting filled with grain sales, the bids are not likely to improve.

There is no way that the amount of grain to be shipped out of Australia over the coming marketing year has been bought by the trade yet, regardless of which buyers have shipping slots for bulk export.

Similarly domestic users, container traders, and other opportunistic traders are unlikely to have accumulated their requirements.

Buyers, whoever they may be, will still need to be buying grain in the months ahead, and growers have the ability to offer their grain for sale at the price they feel is fair value.

21 different buyers bought grain through Clear Grain Exchange last week and there were more searching for grain offered for sale on the exchange. More than 300 are registered.

Traded prices on the exchange have regularly been at better values than published bids or prices on cash boards evidencing that there is often better value available for your grain.

Traded values on Clear Grain Exchange have consistently been better than published bids.

Some buyers can accumulate grain more easily than other buyers by advertising published bids. Let’s make it easier for all buyers to try and buy your grain.

I can understand the mentality to sell. Historically strong prices and strong yields will result in healthy profits this year for many. But are growers maximising this year’s returns? The fact is grower bids are well below global values.

Grower selling is likely the largest single factor impacting the price growers are receiving for their grain. If every grower was offering their grain for sale at stronger prices, they would very likely be receiving better values.

Offer your grain at your price to all buyers on the independent and secure exchange or call 1800 000 410.

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