WEDNESDAY’s bid prices at port for barley all states showed a range spanning $49 per tonne.

What is driving the large discrepancy?

It comes down to a natural and predictable reaction of growers facing the choice of whether to hold or sell at harvest time.

The below list shows those bid prices at ports around the country on Wednesday (note these are a snapshot of indicative bid prices, displayed as indications by market participants on that day):

Brisbane          197      LDC

Newcastle        191      Glencore

Port Kembla    171      GNC

Melbourne       170      Elders

Geelong            168      Emerald

Portland           165      GNC

Adelaide           164      CBH

Giles                  164      CBH

Wallaroo           164      CBH

Port Lincoln    151      CBH

Thevenard       148      Centre State and COFCO

Esperance        193      CBH

Albany              194      CBH

Kwinana          198      CBH

Geraldton        190      CBH

Resistance to selling barley at a harvest price of around $110/mt ex-farm in  far-western areas of Queensland, NSW or SA is a key influence on the price.

A melting-pot of factors balance the resistance of sellers with the alternatives that buyers see available to them for delivery December and into 2017 as summer crop and (later) new crop influences develop.

Some of these factors include:

East coast Australia feed inputs are ­­­­expensive

Sorghum has remained in strong demand from Chinese buyers for alcohol production, pushing up prices in Queensland and NSW.

Plenty of sorghum stock traded and shipped at good prices in late 2016, clearing storage space ahead of the winter-crop harvest.

The animal feed ingredients sector does not have the luxury of waiting till prices get cheaper.  They have mouths to feed and hungry cows, pigs or poultry don’t wait.

Animal-feeders today who might prefer sorghum in their ration would look at the $230 price tag and try to find something with better value – i.e. wheat, barley, cottonseed, almond hulls, meals or mill offal.

The supply of wheat suited to animal-feed grade (known as 70/10, referring to test weight and screening) is tight in Queensland and northern NSW, directing the attention of feeders towards expensive grades of (human consumption) wheat they would generally prefer not to feed to animals.

The prices of all inputs fall into line in a least-cost ration formulation, and the strong price of one leading input, such as sorghum, has the effect of dragging up the value of all others.

Big domestic feeding operations throughout Victoria and NSW are not mirrored by WA or South Australia’s west coast ports

The hub of intensive animal feeding notionally follows urban populations.  With the exception of the predominance of cattle feeding in Queensland, the poultry pig and dairy centres are in the states of New South Wales and Victoria.  Both states have active domestic demand as well as competitive container packing export operations tributary to all main ports.

WA port pricing meets the export task to shift the big crop into marketplace

Looking for every opportunity to move the big winter-crop across the wharf onto vessels for export, buyers in Western Australia have stood squarely in front of growers to attract tonnes of barley across the range of qualities for shipment to Japan premium buyers, and to all Asian destinations and the livestock feed market in the Middle East such as Saudi Arabia and the Gulf states.

WA ocean freight to destination is typically several dollars cheaper than ocean freight from other states to destination because sailing time and ocean distance is shorter, which gives offshore buyers of WA barley sharp access to barley grades available from the west.

It is fortunate for WA growers who otherwise, consistent with a small urban population, have few local human and stockfeed outlets.