Dennis Ward, managing director of specialist birdseed manufacturer, Avigrain, discusses the prospects for sunflower and millet pricing this season.
WHAT is the price of sunflower and millet going to be this year? It’s a good question that farmers should be asking their customers before planting a crop.
Unfortunately, every year the answer is the same. At Avigrain, we don’t know what the price will be. If you want a precise number – buy a dartboard.
A better question is to ask what factors might influence the price this season. One of the beauties of being in the grain job is that every year is different and this summer crop is shaping up to be an interesting one.
Like most years, the uncertainty comes from climatic volatility. Global climate modelling talks a lot about feedback loops, complex systems where one factor will have an influence in other areas, the effect of which will influence further events.
How does climate volatility and feedback loops relate to grain marketing?
Let’s look at the factors which we think will influential in 2019.
All are derived from climatic conditions – the unprecedented failure of the 2018 winter crop and the perennial question of how much rain we’ll get.
The summer cropping areas of Queensland and northern NSW have just been through the worst winter cropping season in recorded history.
At the start of the season there is more fallow ground available for summer cropping than ever before.
Grain growers have just missed out on a winter crop and if plant available water is there they will want to plant a summer crop and get some money flowing. It’s a long way until winter harvest 2019.
Having established the fact there is great potential and opportunity for a large summer crop planting, what will go in the ground?
With a large east coast deficit of feed grain we expect Western Australian cereals to set the price of sorghum in 2019.
Any sorghum grown will be highly sought after by end users and will likely fetch a price which is a percentage of the white grain price.
We are told sorghum needs to be under 80 per cent of the white grain price before feedlots will take it in.
On that basis $350-400/tonne Darling Downs looks to be the price range and it will remain while WA imports are required.
Planting wall to wall sorghum would be the logical decision in a year when climatic conditions have left the east coast without sufficient feed grain to meet domestic demand.
Gritting corn contracts appear to be in the high $400s/t this year and would need to be to compete with strong sorghum pricing.
Silage will also be sought after as people restock after the past years feeding.
Seed companies must plan production years in advance. The logical best guess is to take an average plant and perhaps add a bit extra for good years.
So, it is no surprise that this year with a huge area of summer crop to be planted and obvious crops to have a crack at that seed suppliers have now run out of sorghum and corn planting seed.
Once again this situation is driven by volatility in climatic conditions. Seed companies cannot plan for such wide swings in demand.
If there is fallow ground available and enough water to plant, without sorghum and corn seed, growers are looking for other options.
Without a doubt mung beans will come into play and the cotton sector will do their thing but summer crop growers are also considering sunflowers and millets.
Back to the original question
What factors will influence the price of millets and sunflowers in 2019?
- How much fallow ground is available for summer crop planting after the seed limited corn and sorghum plant?
- Is leaving this ground through to 2019 winter crop a good option? What are forward chick pea and cereal prices looking like? All questions which have future local and global climatic conditions as the answer. In 2016 Australia had a cracking season and prices where at historical lows. On the back of failed Indian monsoons chickpeas have been recently priced at all time highs. What will next year bring?
- For millets, the decisions made by growers who use White French Millet as a cover crop could be influential. There are significant hectares in this year but in theory these cover crops should get sprayed out shortly. With continuing rain events growers may decide to cash in an opportunity crop.
- For sunflowers, the lack of sorghum planting seed could lead to a big plant, especially if there is a late break. If large hectares of sunflowers are planted this could leave growers with a crop that is difficult to sell. Unlike sorghum where every grain will be keenly sought after, this year there is no market for excess supply of sunflower and millet, so a successful large planting will have a dampening effect on price.
- Is there seed available? In recent years sunflower planting seed has sometimes been short in supply, driving limited planting and high prices. This year all seed companies report good stocks.
- Over-riding all these considerations is the weather. While there has been a start to summer crop planting, it’s patchy and with little subsoil moisture will be dependent on continued in-crop rainfall. Models show a likely El Nino effect this summer but summer storms generally can be relied upon for some moisture.
So, when we are asked what the price of sunflowers and millet will be this year and reply – we don’t know – we’re not being disingenuous or holding back information, we’re just being honest. We can give you a definitive number you in May once it’s all played out.
Until then – anyone for darts?
Dennis Ward is managing director of specialist birdseed manufacturer, Avigrain.
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