By James Urquhart - AWB
The 20/21 season will be one remembered by growers and industry players for many years to come. It will be one of those benchmark years that is reflected upon around kitchen tables and boardrooms as the new yardstick for what is deemed a “bin buster.” For the grower that has successfully grown, harvested, stored and marketed their winter crop the hard work is largely behind them and the focus now turns to planning and growing the 21/22 crop. However, for those with grain still to execute, both exporters and growers alike, there remains the considerable challenge of moving it.
Unlike the previous few years when supply chains have been turned inside out to feed domestic requirements, trade flows are well and truly back to normal with exports to offshore destinations the main game in town. In fact, demand for Australian grains has never been stronger. The big crop is pricing itself into the traditional export homes but also into countries that are not as consistent in their appetite for Australian grain. A looming market inverse scheduled from July when the burgeoning Black Sea crop comes on line, is incentivising exporters to put as much as possible on a boat, as quick as possible. As such, grain is leaving the country at a pace not seen for a decade or more, pushing supply chains to their limits. Export facilities (old and new), rolling stock and road freight are all running at, or very near capacity and at times groaning under the weight of the heavy workload.
Political intervention continues to cause disruption to global commodities markets, driven by the sensitive issue of national food security and inflation. The UN’s Food and Agriculture Organisation reports the international cost of a basket of food to have risen for its 8th consecutive month, to levels not seen since 2014. It is with this kind of escalation in costs shouldered by their citizens, both Russia and Argentina have recently implemented methods of attempting to curb the rising cost of food and to ensure they retain sufficient inventory to meet domestic requirements. The success of which has been questionable, as the prospect of reduced supplies from major exporting countries has seen global markets subsequently rally to offset those tariffs – further jet fuelled by an extraordinary corn buying spree by China. To this point, prices offered to the Australian seller have not matched the offshore moves one for one, with most exporters and domestic consumers likely to have plenty of cover following a heavy grower selling program through the harvest period.
So whilst the 20/21 harvest will last long in the memory of growers due to the sheer scale of the crop, for those who are involved beyond the farm gate it is shaping up to be one that will be remembered for the frenetic pace of exports, the monumental task undertaken by the supply chain and the unprecedented challenges presented by global political activities.