High grain prices pressure food processors

High grain prices pressure food processors


National grain and food processors have been expanding processing capacity in areas to limit exposure to the higher northern grain prices.


Ongoing tight northern grain supplies are prompting industry change as grain users and food processors adjust businesses.

In January poultry processor Baida closed its processing facility at Ipswich as it consolidated operations NSW. Last week, Ingham’s Group, Australia’s other major poultry processor said it would scale back its value-add meat processing in Brisbane while expanding capacity in other facilities in NSW, Victoria and South Australia. National grain and food processors, like Baida and Ingham’s, have been expanding processing capacity in areas to limit exposure to the higher northern grain prices, but also escape the rapid expansion of the urban sprawl around the capital cities.

High grain prices are also impacting other grain users. Brisbane-based flour millers and maltsters are now being forced to ship more of the grain supplies by ship from SA and WA. End users have been trucking grain by road from NSW and Victoria for months but these supplies are becoming increasingly difficult to access.

Price pressure continues to build on feedlots as well. Darling Downs feedlots are also being forced to draw interstate grain supplies by ship as southern grain supplies dry up. Usually, feedlots enjoy the benefit cheaper grain because they are in the cropping areas, but the reversal in the supply chain means grain prices are even further inflated as they are having to truck grain from the port to the feedlot.

Grain traders are now saying several ships are due to discharge grain in Brisbane in July discharging upwards of 100,000 tonnes of wheat and barley.

Northern grain markets were largely unchanged last week. It seems that grain users have been forced to secure nearby coverage from the expensive interstate movements. Traders are saying it was very hard to conclude any business. Northern old crop markets are at full execution costs to tranship grain from interstate and it seems a lot of business already concluded at prices that have been high enough to ship wheat and barley around by ship from interstate.

Stockfeed wheat was unchanged at $405 delivered into the Darling Downs. Traders are saying that interstate wheat is being offered at $385 on truck at the Brisbane wharf.

World wheat markets pushed higher last week on growing concerns for the size of the European and Black Sea harvests. A German farmers group lowered its forecast for the 2018 wheat crop to 15 per cent below last year as hot, dry weather in May and June cut yields.

Questions remain over the size of Russia’s wheat crop as well. Dry weather through May and June has resulted in a marked deterioration in the vegetative health of crops across Southern Russia is putting further pressure on production estimates but there is a considerable range in the production estimates. Russia has harvested 13.1 million tonnes of wheat at July 5 with yields down 20pcon the yields at time last year


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