The Productivity Commission (PC) has backed ProFarmer calls to widen the provision of timely and accurate information in its draft report on Wheat Export Marketing Arrangements. In its report, it says that ‘Timely and accurate information is important for supporting an efficient bulk wheat export market’.
The Commission considers that provision of regular and timely information on stocks by state is essential to support an efficient wheat market.
Currently the PC views that the Value of disaggregated stocks info accrues to the bulk handling companies. Although the Commission acknowledges that unequal access to more disaggregated stocks information confers a marketing advantage on the trading bulk handling companies, that advantage is a consequence of the business model the bulk handlers have invested in (except CBH which is apparently a co-operative and acts in the interests of its members rather than its shareholders).
In its report the PC says the availability of information is critical for the efficient and effective operation of the bulk wheat export market. Information supports and guides grower production and investment decisions, marketing decisions, and the operation and use of transport, storage and port terminal services. Information can also facilitate effective competition.
It was considered that some market participants have greater access to information on the volume and quality of stocks information than others, and that this information asymmetry gives rise to competition concerns.
The publication of national wheat stocks information is a basic prerequisite for any competitive wheat exporting region. International customers will consider many variables ahead of deciding where to purchase wheat, including, for example, stocks in each region, freight costs, trade restrictions and reputation. Wheat stocks information is a critical driver of customer and trader purchasing decisions.
If customers and traders do not have access to information on Australian wheat stocks, they cannot verify whether the Australian market holds sufficient volumes of wheat to meet their demands. Withholding this information from the market therefore risks deterring international customers and traders from buying wheat from Australia.
Monday, March 29, 2010
Sunday, March 21, 2010
Cool heads needed for tough times
The past year has been extremely tough for Australia’s agricultural industries. High input prices, a collapse in commodity prices and harsh seasonal conditions have put many farm businesses in a precarious position. Some farm consultants I have spoken to reckon it is the toughest budget season they have ever been through.
It is no coincidence that many of our farming representative bodies are under pressure. In the past few weeks we have seen a beef industry crisis meeting that put Meat and Livestock Australia (MLA) to the sword; the resignation of the CEO of Australian Wool Innovation (AWI); and a grains industry crisis meeting in WA calling for industry assistance.
This would come as no surprise to those that have had a long-term involvement in Australian agriculture. By its nature, agriculture is cyclical and is characterised by sharp swings in prices, conditions and sentiment. At the bottom of these cycles it can appear that agricultural production has no future, while at the top it appears opportunities are limitless. The reality is somewhere in between.
Human nature dictates that we must find someone to blame for the predicament. While sometimes this can be the catalyst for some blood-letting and good change – the reforms of livestock industry structures in the late 1990’s that led to the formation of MLA - have been very successful in my view. Often this can result in futile and harmful instability. The wool industry for example seems to have been plagued by constant instability over the past couple of decades which has distracted participants from the job of rebuilding demand for Australian wool (in its 9yrs, AWI has had 21 Directors, 4 Chairman and 4 CEO’s).
Next we will see sectors of the industry - both fighting the cyclical downturn - start to turn on each other. Already farmer representatives are trotting out some of the age old bones of contention ‘T-bone steak has skyrocketed to $20.87/kg – all while I was battling to get $1.70/kg liveweight for cattle’. Such statements involve such a cursory analysis that they serve little purpose, other than to inflame an already volatile situation.
Now is the time for cool heads and for the real industry leaders to stand up and take charge. Tough times can provide a mandate for change, but if any change is to be ultimately successful, it needs to be focussed on achieving the best long-term outcomes for the industry, not change for change’s sake.
It is no coincidence that many of our farming representative bodies are under pressure. In the past few weeks we have seen a beef industry crisis meeting that put Meat and Livestock Australia (MLA) to the sword; the resignation of the CEO of Australian Wool Innovation (AWI); and a grains industry crisis meeting in WA calling for industry assistance.
This would come as no surprise to those that have had a long-term involvement in Australian agriculture. By its nature, agriculture is cyclical and is characterised by sharp swings in prices, conditions and sentiment. At the bottom of these cycles it can appear that agricultural production has no future, while at the top it appears opportunities are limitless. The reality is somewhere in between.
Human nature dictates that we must find someone to blame for the predicament. While sometimes this can be the catalyst for some blood-letting and good change – the reforms of livestock industry structures in the late 1990’s that led to the formation of MLA - have been very successful in my view. Often this can result in futile and harmful instability. The wool industry for example seems to have been plagued by constant instability over the past couple of decades which has distracted participants from the job of rebuilding demand for Australian wool (in its 9yrs, AWI has had 21 Directors, 4 Chairman and 4 CEO’s).
Next we will see sectors of the industry - both fighting the cyclical downturn - start to turn on each other. Already farmer representatives are trotting out some of the age old bones of contention ‘T-bone steak has skyrocketed to $20.87/kg – all while I was battling to get $1.70/kg liveweight for cattle’. Such statements involve such a cursory analysis that they serve little purpose, other than to inflame an already volatile situation.
Now is the time for cool heads and for the real industry leaders to stand up and take charge. Tough times can provide a mandate for change, but if any change is to be ultimately successful, it needs to be focussed on achieving the best long-term outcomes for the industry, not change for change’s sake.
Sunday, March 14, 2010
V-turn ahead for oilseeds
Oilseeds copped the markets wrath late last week after initially rising after a supportive USDA report. News that China was cancelling some US soybean sales dovetailed with jitters over a drop in Chinese soy demand as that nation attempts to quell inflation, a negative US weekly soybean export sales report and mounting production estimates out of Sth America. While the news on the canola front was much less confronting it is hard to see canola prices avoiding the v-turn ahead of the oilseed complex.
The market was spooked after China’s February CPI was pegged at a 16 month high of 2.7%, while another report revealed housing prices rose at a rate exceeding 10%. A further tightening in Chinese monetary policy now looks a certain bet. Trade concern pivots on the impact this may have on Chinese demand for soybeans and they didn’t have to wait long; last week the USDA announced cancellations of exports sales of US beans for China and other unknown destinations.
Delays at Sth American ports have prevented further cancellations and, for now, have prevented nearby futures from gathering enough momentum to challenge contract lows of around $9/bu. There is over 4mmt’s of soybeans waiting to load at Brazil’s 3 primary ports which is causing delays as long as 20-22 days.
Meanwhile, while demand is backing off, crop estimates are rising. The Buenos Aires Grains Exchange bumped its Argie soy crop up to 53.5mt; while an Argentine farm group (ACSOJA) has raised their Argentine soy crop estimate to 55mmt – both estimates are above last Wednesday’s USDA crop estimate of 53mmt.
Brazilian soy crop estimates also continue to grow with ABIOVE – Brazil’s soy processing association - weighing in with a 67.6mmt crop, which is above most analysts expectations.
While compared to beans, the canola balance sheet is reasonably well-balanced - with a heavily laden global soybean balance sheet - canola will most likely be challenged to sustain rallies in the near-term.
Although there are reasons to expect some rallies in the weeks ahead; solid Canadian crusher and export demand, China trade resolution (once their local crop has cleared the decks), weather worries (Western Canada is too dry and eastern Canada too wet), speculative short-covering, soy-oil support (oil value is holding reasonably well, it is the meal side that is dragging down values), with broader world oilseed supplies still at this time building faster than demand, it remains our view that periodic rallies must be sold and not considered (at least at this time) as any start to sustained upside potential.
The market was spooked after China’s February CPI was pegged at a 16 month high of 2.7%, while another report revealed housing prices rose at a rate exceeding 10%. A further tightening in Chinese monetary policy now looks a certain bet. Trade concern pivots on the impact this may have on Chinese demand for soybeans and they didn’t have to wait long; last week the USDA announced cancellations of exports sales of US beans for China and other unknown destinations.
Delays at Sth American ports have prevented further cancellations and, for now, have prevented nearby futures from gathering enough momentum to challenge contract lows of around $9/bu. There is over 4mmt’s of soybeans waiting to load at Brazil’s 3 primary ports which is causing delays as long as 20-22 days.
Meanwhile, while demand is backing off, crop estimates are rising. The Buenos Aires Grains Exchange bumped its Argie soy crop up to 53.5mt; while an Argentine farm group (ACSOJA) has raised their Argentine soy crop estimate to 55mmt – both estimates are above last Wednesday’s USDA crop estimate of 53mmt.
Brazilian soy crop estimates also continue to grow with ABIOVE – Brazil’s soy processing association - weighing in with a 67.6mmt crop, which is above most analysts expectations.
While compared to beans, the canola balance sheet is reasonably well-balanced - with a heavily laden global soybean balance sheet - canola will most likely be challenged to sustain rallies in the near-term.
Although there are reasons to expect some rallies in the weeks ahead; solid Canadian crusher and export demand, China trade resolution (once their local crop has cleared the decks), weather worries (Western Canada is too dry and eastern Canada too wet), speculative short-covering, soy-oil support (oil value is holding reasonably well, it is the meal side that is dragging down values), with broader world oilseed supplies still at this time building faster than demand, it remains our view that periodic rallies must be sold and not considered (at least at this time) as any start to sustained upside potential.
Sunday, March 7, 2010
Will USDA move the corn needle?
Following the January Annual Production Summary, USDAannounced it would resurvey some states that had a significant amount of corn still in the field for a special 2009 corn crop update on March 10.
Almost immediately, traders and crop watchers assumed this pointed down USDA’s national average corn yield estimate of 165bu/acre.
But US ProFarmer is not so sure. It is skeptical — about what yield-moving data USDA can collect from “the few” acres that were unharvested at the time the January survey was done.
Some late-season yield bumps may even push the national average yield up slightly in the March 10 update. US ProFarmer is not anticipating a major shift in the yield estimate on the basis of a resurveying of acres unharvested as at January.
If, however, USDA’s statisticians take a closer look at issues like test weight and moisture levels (which isn’t supposed to happen) on the 92% of the crop that was harvested at the time of the Annual Production Summary survey, that could'move the needle.'
By subscribing to ProFarmer for less than $1.50/day, you will not only get access to the critical market intelligence that you need, you can also make FREE calls to our experts.
Make the right move now and subscribe to ProFarmer by calling 1300 302 143 or by going online at www.profarmer.com.au
Almost immediately, traders and crop watchers assumed this pointed down USDA’s national average corn yield estimate of 165bu/acre.
But US ProFarmer is not so sure. It is skeptical — about what yield-moving data USDA can collect from “the few” acres that were unharvested at the time the January survey was done.
Some late-season yield bumps may even push the national average yield up slightly in the March 10 update. US ProFarmer is not anticipating a major shift in the yield estimate on the basis of a resurveying of acres unharvested as at January.
If, however, USDA’s statisticians take a closer look at issues like test weight and moisture levels (which isn’t supposed to happen) on the 92% of the crop that was harvested at the time of the Annual Production Summary survey, that could'move the needle.'
By subscribing to ProFarmer for less than $1.50/day, you will not only get access to the critical market intelligence that you need, you can also make FREE calls to our experts.
Make the right move now and subscribe to ProFarmer by calling 1300 302 143 or by going online at www.profarmer.com.au
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