Well folks this is the last edition before the end of harvest. We are hopefully ready for what is shaping up to be one of the best harvests for a long while. We have bolstered our team and also our systems and we are ready to help you with the marketing piece of this years harvest puzzle.
WAREHOUSING AGREEMENTS AND GRAINCORP TRANSFERS ETC.
We can help you with organising warehousing agreements for your various commodities as well as the physical sales. We can also help you to execute all transfers of grain within the bulk handling system. It's important that this is handled diligently as it can cost you money if you are not transferring on time or if you are not transferring the most optimal grades against your various contracts. We will send all regular customers a form to sign giving Rain Ag authorisation to handle this function on your behalf. If you would appreciate assistance please sign it and return and we will happily assist.
DON'T BE AFRAID TO REACH OUT
If you have never dealt with Rain Ag or you have done a bit in the past but would like to do more – we really want to here from you. Please give us a call and let us know your situation. Our business model allows you to deal with us when it suits and we don’t lock you in. There is no obligation, however we find the best relationships we have are with those who communicate well with us and trust us to do the right thing by them.
THE TUESDAY AND THURSDAY REPORTS
Some of you may have noticed you have been left off the Tuesday and Thursday reports lately. This is probably because you haven’t done business with us in a while. If you would like to be put back on the list, please just let us know and we will re-subscribe you.
TEXT MESSAGING SERVICE
Our regular customers will receive up to date pricing information daily via text during the season. Please let us know if you are not receiving daily messaging and would like to, OR if you are receiving daily messaging and would rather not.
GRAIN POOLS
We are contracting grain for Aperture Ag Grain pools this season. With limited downside potential in basis, and futures prices the highest in 5 years we may see a very good case for hedging this season and selling the physical into a stronger basis.
Rain Ag have formed an alliance with Alex Campbell and Aperture Ag in order to be able to offer our clients a more comprehensive marketing service. Alex has over 10 years of experience running trading and risk management strategies for industry leading pools. We believe it is critical for a pool manager to have this type of history and experience hence the partnership with Alex.
There are two main strategies being managed this season:
- The Total Returns Pricing Pool – designed to return a net positive outcome no matter what the market movement, i.e. make profit in a rising and in a falling market.
- The Sell and Replace Pricing Pool – providing large cashflow from the sale of physical and ongoing participation in a rising market through an options strategy.
If you are interested in looking at this option please let us know and we will get you some further information.
CASH ADVANCE OPTION
If you need some cash at harvest but don’t want to sell we have inventory finance available. This is only available for grain in the bulk handling system. Please give us as much warning as possible if you are wanting to look at this option.
A FEW MORE RANDOM 'DUMB' QUESTIONS ABOUT GRAIN
* What is AH9?
There are a couple of wheat contracts getting around at the moment with an AH9 spread. This may be good insurance if we get a very wet harvest. AH9 must be 11.5 min protein, test weight 68 but has no limit on falling numbers or sprouted grain.
* What is a Falling Number test?
When it rains just before harvest, grain may start to germinate (sprout) in the head. Germination causes an increase in alpha-amylase, an enzyme that breaks down starch. Grain with high levels of alpha-amylase produces lower quality flour. The impact of sprout damage is not fully realised until the grain is processed into end products such as bread or Asian noodles.
* What do I do with Number 3 fabas?
At this stage there is a market for them so give us a call for details. Also we have a storage option organised for them in anticipation of there being a few around.
* What do I do with Number 2 Chickpeas?
Most sites that you deliver to will have the option to grade your chickpeas, it will cost you about $20 per tonne plus the loss on the weight depending on how much they take out. If you can grade them on farm it may be a better option. A quick way to get a good idea on whether they are ok or not is to take a photo and send to us. Tip a sample out preferably on a white surface like a sheet of paper and flatten it out so any weed seeds etc are visible in the photo.
* How do I go about delivering to Graincorp?
Make sure your truck driver has your NGR details and simply deliver against this. You will need to transfer your tonnes to the various contracts you have after delivery via the crop connect system. You won’t have the option this year to take the cash price at the silo. As mentioned above we can do this for you if you would like. It's also important to look outside the crop connect system for pricing as there are some buyers that are not posting on crop connect and there is often another dollar or two in it.
* What do I do if the price is no good at harvest but I need cash?
Consider a pool option (see above) where you can get a fair chunk of cash up front but still participate in the market. Alternatively we have a cash advance option for about $100/t if you would simply like to warehouse your grain to buy time.
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WELCOME TO THE TEAM ALEX LUCERO!
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Rain Ag is excited to introduce you all to our newest team member! At the end of September, we welcomed Alex Lucero to our Rain Ag team. Alex is based in the Narrabri office with Tim and Nat, and will be Tim's Marketing & Broker Assistant.
Some of you would have met Alex at our last Grower Meeting out west, and day one with Rain Ag saw him on the road with Tim. Alex has hit the ground running coming into the busy harvest period.
In true Rain Ag style, we thought we'd get Alex to write a few words about himself - WELCOME TO RAIN AG ALEX!
Hi everyone, my name’s Alex – I’m 21 years old and I currently live in Wee Waa. I was born and raised in Sydney where I went to Macquarie University to study Applied Finance and minor in Business Information Systems.
Meeting my partner (who was from Wee Waa) at university had me visiting the small town every holiday - getting to know the people, the town and the lifestyle. Upon us both graduating the same year, we made the decision (both from a lifestyle and a financial angle) to move up to Wee Waa to start our life, careers and to try and get ahead.
I have a background in financial markets and analysis and am very much looking forward to seeing how I will be able to adapt my current knowledge and experience into the world of commodities where Rain Ag and the team feel very right in helping me achieve this.
On the side - I love playing soccer and running around, creating business ideas, learning new things, and spending time with family and friends.
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First day on the job saw Alex inspecting crops with Tim in the western area. Here's Alex checking out one of the barley crops they came across.
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SOUTH AMERICA TOUR UPDATE
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It will come as no surprise to anyone that we won’t be heading to South America next year as originally planned. While there is still so much uncertainty, even locally we have not yet planned an alternative option. We wont be touring at all in 2021 and we hope to be announcing a 2022 tour early in the new year. The tour will most likely be in Australia and it will be a grand occasion for our valued clients.
POINTS
The good news is you will continue to accumulate points and they will count towards the next tour. We will provide you with an explanation of the adjusted points system once we have confirmed the itinerary early next year.
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The ICE cotton futures are the highest we have seen since March at 68-69USc/lb. The recent rally appears to be related to lower production estimates for the US crop more than anything else.
Other bullish influences include hedge funds buying commodities including cotton. Its also happening in our other markets such as wheat at the moment, helping to drive these markets up despite very high relative world stock levels.
The Chinese reserve has been buying steadily US and Brazilian cotton and we are now seeing a bit more buying interest here from China for the bales in warehouse in Australia.
I reckon its pretty interesting that our market has remained relatively strong throughout the international pandemic and it doesn’t feel to me that it’s about to collapse.
I think the biggest risk to our price for cotton and in fact all of our commodities in the near to medium term is the likely volatility in the AUD heading into and out of the US election.
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COTTON ICE FUTURES
US69.12c/lb (May 2021)
Range last 30 days
66.05 - 69.99
Current AUD/Bale price
2021 - $520
2022 - $510
2023 - $500
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AUSTRALIAN DOLLAR
AUD - Current 72.50
Range last 7 days
71.00 - 72.50
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We still have a few bales to sell and the market has been very quiet until last week. Last week we started seeing some buying interest again from China and we got some business done at around $550 free in store. While it has been long wait (in Australian cotton grower marketing terms) for the growers who put bales in the warehouse at around $500, the upward shift in price has validated their decision to store bales. It's commonplace to store grain and sell when the market comes to you so it should be no different in cotton.
For more information on this option please see www.rawcotton.com.au
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CHICKPEAS - are we seeing the end of India's tariff?
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I do not know is the short answer, but some traders think they know. With the market rallying around $40 to $50/mt in the last few weeks. At this stage, the demand is staying the same with no official word on the Indian Government relaxing the 66% tariff on Aussie chickpeas being exported to India. I distinctly remember when India first put the chickpea tariff in place, about a month beforehand the rumour started, and it grew until the official announcement was made. This leak of information was very deliberate as this gave all the Indian traders plenty of time to finalise shipments before the tariff took hold on the market. Most importing traders in India made a good profit that season and the Aussie traders lost out. I am assuming this early warning is also a chance for the Indian traders to start buying up Aussie peas so they can make another trading profit. Again, I have no idea if the tariffs will be partly lifted or totally or not at all but the rumour mill is working overtime.
If the tariff is lifted totally, we could expect a good rally in the market as the Indian domestic pea market is much higher than ours. If only partially (we think this is the most likely) the rally may not be as high, and we might even be at those highs already. Again, if the market remains closed, we will see it go back to preharvest lows, in the low to mid $500’s. The hope is that it opens, and it will also give us some prospects for the Chickpea market in the coming years.
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New Crop 20/21 Delivered Downs (Kyabra’s) Oct-20 $675/mt
Delivered Down Oct-Nov '20: $660/mt, Wee Waa $625/mt, Narrabri $610/mt, Goondiwindi $625/mt
Delivered Down Dec-Jan '21: $660/mt Narrabri $640/mt Wee Waa $625 & Goondiwindi $625
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WHEAT - fund driven rally
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We are very close to the manic period most people call “harvest” and some of us may need a few days of practice before we can get back on the horse properly. There are a lot of nervous people keeping there finger, toes and any other digits crossed hoping for dry weather for the next month or so. After having so many bad years the anticipation is showing for many of us. So on behalf of Rain Ag we wish you all the best!
Now for some good news with the wheat market continuing to rally which started around a month ago on the back of demand from China, then dry planting conditions in the northern hemisphere for winter wheat planting, and now we have a lot of hedge fund money pushing the market higher. It seems like we have hit a perfect storm with crop yield potential looking good and now prices are starting to look good as well. For interest sake, I had a look through our wheat sale prices around mid November 2016 (last time we had a big crop): APW1 was around $180/mt in the Moree GC, and on Thursday we sold APW1 Multi grade into Moree @ $280 ($100/mt differnce). Also, we sold ASW1 into Trangie GC @ $164/mt, and on Thursday prices were $250/mt ASW1 into Trangie GC ($86/mt difference). If the prices stay around these levels we will have a lot of happy farmers. A lot of people still can’t believe it and are asking what is going to spoil the party (have faith!).
We are still seeing grade spreads as wide as $20 to $25/mt above for APW1 to APH1 in Northern NSW and much narrower for Sth QLD as the feedlot market is still dominating this price. The early reports are that yields and protein are looking very good and it is possible we may see a large percentage of the crop land in the H2 and above range in the North and central valleys assuming the wet weather stays away.
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NEW CROP Delivered Prices: Delivered Jan+ Melb-$318 APW1, Bris $336 H2, Downs SFW $308, Griffith ASW1 $250 Ex-Farm Jan+ Central West $255, Moree & Narrabri $268, Walgett $258. APW Multi Grades Sites Oct-Nov- Thallon $270, Burren $270, Narrabri & Moree $278, Trangie $265, Coonamble $260, Red Bend $268, Temora $270, Goolgowi $255, Condobolin $260.
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COTTONSEED - exporting again
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New crop Cottonseed has woken-up from its slumber with interest from the Chinese. While oilseed prices have been rallying internationally cottonseed was very slow to move, now we are seeing renewed interest from the Chinese market covering their oilseed shorts. This has bought a new dynamic to the market as feedlots have found it hard to be optimistic buyers due to a squeeze in their margins and a recent rally in white grains. China is a buyer that can swallow the crop if the price is right so any rally in cottonseed in China will continue to help our crops demand. Old crop is also starting to pick up as feedlots try to cover any shorts they have running into the end of the year.
Prices Ex-Gin 19/20: Downs $495, Gwydir $475, Macquarie $470, MIA $455.
Prices Ex-Gin 20/21: Downs $345, Gwydir $320, Macquarie $290, MIA $280
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Sorghum export demand is still being driven buy Chinese demand and there are expectations that we will see this market continue to be firm for the next few months at least. If you have any early sorghum in, it might be worth a fair bit at harvest as we have seen a few growers and traders short the market again assuming that we would get a break in the weather early. So keep your powder dry for the fireworks. Later planted sorghum may not see the same shorts but prices are at very good levels considering we have little to no domestic demand at these prices (all China).
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Most growers we talk to regarding fababeans are very disappointed with yield and quality, we are seeing a lot of the early northern crops coming in a #2 grade. As a result we are seeing a number of washouts before or at harvest. These washouts have artificially pushed the spot market up as traders and growers cover shorts. I would expect this short covering to continue for a few more weeks as the crop slowly comes off. Comments from the traders are that these levels are not being supported by export buyers.
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With the current Wheat market $100 higher than this time in 2016 (Last Big Crop), it maybe a sign to sell wheat.
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Allow about 3c to 6c for delivery depending on your proximity to the port.
Just a reminder that we can’t do fuel business unless you are approved for credit with our third party supplier. Once the form is returned, approval can normally occur within 24-48 hrs. Click here to download the form CREDIT APPLICATION.
Once you have filled out email to admin@rainag.com.au and we will fast track the application for you.
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The first person to correctly identify where Peter Horton is in the photo to the right (by return email) will receive a free carton of beer of their choice after their next business transaction with Rain Ag.
Our new prize for the SPOT US! section is on the way! We'll bring you all the details soon. Until they arrive, winners will receive a free carton of beer of their choice (after your next business transaction of course!).
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Growler can be seen in this photo with the massive watermelon located in Chincilla QLD. Luckily, Ian wasn't breaking any COVID border restrictions as he lives and works in Brissy! Congratulations to Scotty Loughnan who was the first to correctly guess where Growler was.
Our new prize for the SPOT US! section is on the way! We'll bring you all the details soon. Until they arrive, winners will receive a free carton of beer of their choice (after your next business transaction of course!).
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CONTACT US:
Northern Region | Tim Whan | Grower Representative | 0448 444 015
Northern Region | Alex Lucero | Marketing & Broker Assistant | 0437 765 367
National | Ian Grellman | Trade Commodities Specialist | 0448 333 959
Southern Region | Peter Horton | Grower Representative | 0448 777 358
Southern Region | Amy Billsborough | Grower Representative | 0406 872 323
Administration | Natasha Coffey | 0447 545 714 | natasha@rainag.com.au
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