THE biggest grain transshipment program in Australian history looks set to wind up this week with the unloading of the Daiwan Fortune in Brisbane.
The vessel is now discharging barley from Western Australia and South Australia to end the flow of an estimated 7 million tonnes (Mt) of interstate grain which started as a trickle in November 2017 when drought first impacted production in New South Wales and Queensland.
By mid-2018, vessels bringing barley and wheat were regularly arriving in Brisbane, and in August 2018 they started arriving in Newcastle too.
The program hit its straps in October 2018, and since then an estimated 5.7 million tonnes (Mt) of WA, SA and Victorian barley and wheat, with some canola, lupins and oats also, have been shipped into ports spread from Geelong in Victoria to Gladstone, 500 kilometres north of Brisbane, to fill deficits caused by drought in NSW and Queensland.
Rail and road is believed to have carried an additional 1.5Mt of South Australian and Victorian grain into NSW and Queensland to supply stockfeed mills, with additional demand coming from flour mills, malthouses, and oilseed-crushing plants.
Trade figures show 3.4Mt of grain were transshipped by sea alone into drought-hit port zones in 2018-19 (Oct-Sep).
In 2019-20, that fell to 2.3Mt, which included around 400,000t of Victorian wheat and barley in total.
In 2018-19, Brisbane accounted for 2Mt and Newcastle 700,000t, dropping to 1.9Mt and 370,000t respectively in 2019-20.
Around 110,000t in 2018-19 and 150,000t in 2019-20 of the Newcastle tonnage was canola shipped from WA to supply Cargill’s crushing plant in Newcastle, which has been unable to source NSW seed due to back-to-back awful seasons for canola in the northern half of the state.
CBH Group from WA and Viterra in SA as the dominant bulk handlers in those states have loaded most of the vessels.
CBH Group chief marketing and trading officer Jason Craig said the cooperative had done around one third of all bulk shipments from WA and SA to eastern Australia between 1 October 2017 and 31 July 2020.
“Over the past three seasons, around 6.5Mt of grain have been shipped from WA and South Australia to NSW and Queensland,” Mr Craig said.
The figure refers to bulk shipments only, and does not include grain freighted east by road or rail from South Australia.
“The majority of grain has been barley at around 60 per cent, 34pc wheat and 6pc other grains.
“With Queensland and northern NSW now able to draw grain supplies from southern NSW and Victoria to cover requirements, the demand for WA and SA grain has tapered off.”
Rail, sea supply from SA
South Australia’s ability to produce wheat well-suited to domestic flour milling, durum, and malting barley, as well as feedgrain, have made it a crucial supplier throughout the eastern Australian drought.
Viterra chief operations officer James Murray said the company had worked closely with multiple buyers and end-use customers to meet east-coast demand, with many counter-parties purchasing grain through the Viterra system for the first time.
“We have out-turned grain by coastal vessels, rail and road since demand for grain in the eastern states started in August 2018, and grain has headed to more than 100 end-use destinations across the country.”
South Australia has a much smaller proportion of domestic grain use than eastern states, and its grain has historically been priced at export parity.
A supply chain which started with trucks, and then expanded to included ships and trains, has shown that grain in volume can be sourced from South Australia, and this may continue into next year.
“These buyers now have confidence in our supply chain, and have continued to source grain from our system.
“It’s very positive, as it provides growers with the benefit of having greater options to markets when they choose to sell their grain.”
Since August 2018, Viterra has loaded more than 250 trains for eastern states, including 100-wagon train sets which loaded for the first time in March this year.
“We have continued to meet the needs of our customers which is a credit to our employees who have adapted from a predominantly export-focused supply chain to instead out-turn grain domestically.”
The supply chain appears to have found maximum efficiency, with SA grain initially sailing into Newcastle, and then being loaded onto trains, primarily to take grain to feedlots in north-west NSW.
“Trains have gone from Newcastle to Moree and Narrabri in the past two years, but once the market knew there was a good crop in Victoria and SA, that turned off, and more grain went direct to inland NSW by rail all the way,” Newcastle Agri Terminal supply-chain manager Chris Treloar said.
Stockfeed pellets and small tonnages of grain from WA have also come into central and northern NSW by rail during the drought.
GrainCorp’s export focus returns
In Brisbane, Boolah Commodity Management (BCM), GrainCorp Fisherman Islands and Queensland Bulk Terminals (QBT) have received the grain on behalf of traders and end users, while GrainCorp Carrington and Newcastle Agri Terminal (NAT) have done the job in Newcastle.
GrainCorp has received the bulk of transshipped grain, and its northern supply-chain senior manager Josh Connell said the GrainCorp team at Brisbane Ports reversed the supply chain in 2018 to import grain through the drought from growers in Victoria, SA and WA.
“The program has delivered well in excess of what we expected and while we’re proud to have been able to support growers and producers on the east coast over the past three years of drought, it is pleasing to see the import program starting to wind down as conditions improve.”
Mr Connell said GrainCorp’s Brisbane team was looking forward to hopefully managing some export volumes once again this season.
“This is an exciting prospect shared by all our port operations teams at GrainCorp, as we prepare for what we expect to be a more positive winter-crop harvest this year.”
Market decouples from port
Since mid-2018, the free-on-truck (FOT) markets in Brisbane and Newcastle have been the trade’s pricing point for grain consumers within 300km or so of the port.
Newcastle’s FOT market dried up when its last barley vessel arrived in June.
Since then, consumers in the Hunter Valley and New England have turned their focus to road-freighted grain coming north through central NSW to tide them over to new-crop supplies which will become available in October.
In Brisbane, BCM, GrainCorp and QBT have all in the past fortnight received their final transshipment vessels for the foreseeable future.
It means consumers in the greater Brisbane and surrounding districts, and on the Darling Downs, are taking delivery of the last of the boat grain.
Port operators will get no time to twiddle their thumbs as they start to take bookings for bulk exports, and Grain Central understands the new-crop wheat cargoes have already been booked out of Victoria and NSW.
“We’re all gearing up for a big year of export,” NAT’s Mr Treloar said.
Depending on international pricing, and the quality of new-crop grain in Queensland and NSW, terminal operators said another vessel or two might make its way around to the east coast.
“We might see potential for another ship.
“We haven’t written off another vessel just yet based on consumer demand, but we do know no one wants to get caught with the last vessel.”
He said a “two-way flow” of grain could well occur later this year, as high-quality grain makes its way from the header via up-country accumulators to export out of Brisbane and Newcastle, and out-of-spec grain goes north to feedlots in southern Queensland.
“We could even see grain that was shipped into Brisbane coming south if those numbers work.”
Rail flow slows
Sources report trains from SA and Victoria last month stopped bringing feedgrain into NSW, but they are still supplying up-country and Sydney flour mills to tide them over until new-crop supplies of NSW milling wheat become available.
Railheads at Parkes, Narrabri, Moree and Werris Creek have out-turned significant amounts of SA and Victorian feedgrain to country NSW consumers as a cheaper option for them than sourcing out of the Newcastle FOT market, or carting by road.
In 2018, interstate grain shipped to Port Kembla and then railed to up-country sites within the port zone became an important supplier of feedgrain.
The big harvest in Victoria last year has provided eastern Australian consumers as far north as the Darling Downs with feedgrain to bolster supplies from their paltry 2019 harvest.
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