AUSTRALIAN grain stocks are extremely tight, particularly on the east coast, which means local prices could remain volatile until harvest, according to Profarmer consultant Ron Storey.
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Speaking at the Australian Grains Industry Conference growers day in Melbourne on Monday, Mr Storey touched on domestic supply and demand, including how little stocks would be left in Australia by the end of September, based on projected exports and consumption.
"Harvest is only a few months away, and on the east coast, wheat and barley stocks (aggregated) are really tight," he said.
"By September 30, there will be very limited stocks left in SA and Qld; 2 million tonnes left in NSW; and only 400,000t left in Vic.
"This is significant because the annual consumption of wheat/barley in Vic is about 3mt, or 250,000t a month.
"By the end of September, Victoria will only have six to eight weeks of supply before we need the new crop to start rolling in. That is very tight. The market will ration this supply with price."
Mr Storey said by their calculations, there would be plenty of grain left in NSW.
"But we don't know where in NSW it is," he said.
However, Mr Storey didn't believe Australia would run out of grain.
"The market will ration the supply by price until we start to see new crop supplies start to flow by the end of November," he said.
Mr Storey also touched upon the forecasts for an El Nino event, but was dubious.
"We don't make our crop forecasts based on weather forecasts," he said. "But we have asked ourselves the 'what if' question?"
"If we assume a decile 5 average rain for the next three months, we predict the wheat crop will be about 26mt.
"If an El Nino is to occur and a decile 2 average rain occurs over the same three months, we predict the crop to be about 21mt.”
Mr Storey said August and September would be an exciting time for Australian grain, particularly if the El Nino did unfold.
"Australia could well become the focus of world grain markets depending on what happens over the next eight to 10 weeks," he said.
"The USDA has pencilled in Australia for a 25 to 26mt wheat crop, so if the El Nino starts to hurt our crops in August-September, we could easily lose 4 to 5mt and it will be quite bullish for prices.
"And because Australian stocks are so tight, we will really need the crop to come in on time – even a two-week delay would result in logistical issues and price spikes for consumers.
- Rolling coverage at www.farmonline.com.au/pages/AGIC2015