Nothing Comes By Chance?

You don’t succeed in life by chance. You don’t make the Australian Open final by chance. Even Steven Bradbury famously winning an Olympic Skating Gold medal was not by chance. Sure there was a lot of luck involved but he still had to be in it to win it. As we reflect on last season and begin to focus on the coming year it’s a great time to highlight what did and didn’t work and determine what requires change.

Sales and Profit

Grain sales should not be just at harvest. History shows time an again that only selling at harvest isn’t the most effective outcome for your business. Unfortunately many growers put their grain marketing at the bottom of the decision tree which often leads to sub optimal or average returns.

Are you holding old season grain?

Looking for the magical $10-$20/t rally?

Well you need to seriously consider the risk that basis (buyer demand) will decrease and cash prices will get lower. Basis is currently at extremely high levels, See Chart 1 (approximately $70-$80/t), for the 1718 season.

In a recent 2.5% rally on CBOT Wheat futures, the local cash prices did not move at all.

This is what we call buyers squeezing basis. They are paying a lot for WA grain versus international sources (Russian/Ukraine) and are not keen to keep throwing money away. If they can buy it cheaper from other cheaper sources then they will. This is a simple economic decision for them and is why Asian and Egyptian buyers have bought Black Sea wheat over the past six months.

Achieving +$3-$5/t above harvest values in May to July is not worth it. When calculating the time value, that money would have been far better working in your bank.

Yes we may see a market rally in the middle of the year or even earlier. We hope so! We hope it also carries into the 2019/20 season. In July 2017 we saw prices achieve 90^th percentile for both 1718 and 1819 season wheat.

Did your business seize this opportunity?

The market is technically set up for a rally if the stars align and the funds and speculators get “weather” nervous. In recent years this has led to the market over and under shooting significantly which is an opportunity. For 2017 the best cash price for Kwinana was $330/t.

What were you selling for at harvest? $270/t?

Do you want to know how to make an extra $60/t!

To succeed efficiently in farming you must sell at good prices. There is no point being the best farmer and agronomist and having a bumper season if you don’t make a profit. We see so many opportunities in our game and a lot missed with the business of life! Implement marketing plans for all grains to ensure these opportunities are never missed again. Pricing your grain doesn’t just happen you need a plan. You need a target and you need to plan to achieve a great outcome. It doesn’t just happen by chance.

Disclaimer

Any views expressed in this article are those of Ten Tigers Consulting. The information and opinions within this material are of general nature only and do not take into account the particular needs or individual circumstances of investors. The material does not constitute any investment recommendation or advice nor does it constitute legal or taxation advice. Ten Tigers Consulting (ABN 20 194 919 017) does not give any warranty, whether express or implied, as to the accuracy, reliability or otherwise of the information. Authorisation for derivatives advice (futures and foreign exchange) held by: Chris Tonkin, Authorised Representative No 290288 with Australian Financial Services License No. 329063 held by Ten Tigers Grain Marketing Pty Ltd. (ABN 45 132 654 472).

Ten Tigers has helped our grain operation grow through a well-balanced marketing program of all our grain types in the current season and beyond. Ten Tigers has given me a greater understanding of our grain business through a fully transparent summary at the completion of each marketing season. Ten Tigers has given our business confidence to expand grain production by allocating achievable pricing target levels on all our grain types. Our business can better allocate time towards the production side knowing that Ten Tigers is managing our marketing in a professional, unemotional manner.

We decided to engage the services of Ten Tigers because we found we were becoming increasingly overwhelmed by the grain marketing decisions we had to make. We were sometimes making poor decisions because we had become indecisive and didn’t have clear target prices in place. We have found the staff at Ten Tigers an absolute pleasure to deal with. They are proactive in keeping lines of communication open and the paperwork they provide us with is easy to understand and very useful. The advice Ten Tigers has provided exactly what we needed. They have helped us set and reach targets and we have already seen the benefits of the grain marketing strategies they helped us put in place.

Ten Tigers has been my grain marketing advisor now for a period of 17 years. I have entrusted Chris Tonkin and his team to assist and direct me in the selling of my grains to suit my needs. With their experience, knowledge and regular contact and updates, I have been able to concentrate on the physical and practical side of farming without the added stress of watching the markets and possibly making wrong decisions. Allowing Ten Tigers to be my “personal broker” has put me in a position where I can relax, travel and profit from my every day farming life.

In the seventeen years we have been working with Chris and his team there has been a huge transformation in grain marketing in our business. Ten Tigers has made these steps a comfortable journey instead of the hill climb they appear to be when we receive correspondence from all different grain identities and our legal obligations we need to meet. Ten Tigers has assisted us to achieve higher daily prices regularly with good communication and sound advice. Ten Tigers has been an important member of our business allowing us to concentrate on growing our grain with the knowledge that Ten Tigers is there to worry about the marketing, optimisation and filling of contracts. The very detailed information that is supplied to us makes record keeping and entering details into our accounting program very simple and quick.

Ten Tigers is a business that specialises in grain marketing and consulting. We use Ten Tigers to help us achieve the best price for our grain, to find out what is happening in the world’s grain market to date and to help with marketing strategies. The best thing is, all this can be achieved by just a few text messages per day and / or a quick phone call while I stay busy growing as much grain as I can. I find them a great deal of benefit to our grain farming business.

Nothing Comes By Chance?

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