Dear Grower

Welcome to Issue 16 of AACL's Grain Co-Production Updates.

Grain Marketing Update

We recently saw the USDA release its November Supply and Demand Report (S&D) providing the market with its latest sign post for S&D figures for wheat, corn and soybeans.

On balance the USDA Report was bullish for corn, however it was bearish for the wheat market which is struggling under the weight of too much low quality feed wheat and not enough protein wheat. This is putting pressure on the wheat market which is being held up by the incredibly tight S&D situation in the corn market.

Harvest is kicking off in the Southern Hemisphere where yield predictions in Argentina and other South American countries have recovered from low initial estimates earlier in the season. These countries are currently offering their new crop wheat to the world market at levels USD 240 FOB.

Harvest in Australia is underway but wet weather is making progress slow. The Australian crop started as being average in size, then fell with unfavourable weather mid season before gradually increasing to the point where WA is heading for its second largest harvest on record.

All this is leading to two key factors set to drive the price for Australian wheat this harvest. Firstly, protein is worth a lot on the world market as it is in tight supply. Poor HRW crops in the US, poor crops in Canada last season and a poor crop in Australia last season have lead to eroding supplies of protein wheat.

Compare this to the situation for low grade wheat this season. Whilst the market is looking to replace expensive corn with wheat there is still a plentiful supply of feed wheats around the world. Starting with Australia, there is a large carryover from last season and a big crop on its way that could be downgraded.

This is the backdrop for how AACL is looking at pricing the GCP Pool this season.
 

2011 SEASON POOL ESTIMATES

Below is the first Pool estimate for the 2011 / 2012 season.

                                    WA Ports            East Coast Ports 
                                   (Kwinana)               (Port Kembla)

Wheat - APW                 $272                        $275
Barley - Feed                  $236                        $214
Canola - Non GM            $586                        $517

Estimates on grade spreads are available via this link under Grain Marketing Downloads.  AACL aims to advise growers of updated estimates on a fortnightly basis.

Due to seasonal factors and market volatility, AACL may not be paying harvest distributions on the above estimates and plans to release estimates for harvest distributions within the coming month.

AACL is expecting to pay growers a 70% distribution, 30 days from receipt of the Harvest Declaration. This will be followed up with another 10 – 20% distribution during April with the Pool to be finalised by June 2012.  Please be aware the above is subject to global grain marketing conditions and therefore may change.

AACL FREIGHT RATES

AACL approved delivery sites and applicable freight rates are as per this link under Grain Marketing Downloads.

Peter McEwen
CHIEF EXECUTIVE OFFICER
AACL Pty Ltd