10 June. 2019

Dancing in the Rain

 Western Australian farmers are out dancing in rubber boots following the delayed Autumn break. Between 20 to 50 millimetres fell across most farms over the weekend.

The South West of the state traditionally sees the rain break mid-May and there were plenty of growers dry seeding up until the end of the first week in June. The rest had pulled up until further notice. This week is a different story.

So, what does it mean for Harvest 2019? Short term, it’s one big sigh of relief across the region. And provided the potential frosts stay away, the state is on track for another strong harvest.

This regional joy has extended only in patches to other Australian growing zones.

Queensland’s Central Highland growers also donned their dancing boots while Southern Queensland needs significantly more rain for an improved harvest.

And the threat of frost looms large for many growers still recovering from extended drought conditions.

Parts of South Australia are having their driest start for 150 years. And growers from East Gippsland are seeking drought relief despite an early Autumn break.

Rabobank is forecasting a total planted area of 18.4 million tonnes across Australia. This is 13% less than the five-year average.

Rain and frost aside, Indonesia’s expanded Black Sea wheat imports  will keep the price pressure on Australian traders and growers during the months ahead.

Once the country’s largest wheat supplier, Australia is finding it hard to compete with the high protein, low price varieties of the Black Sea’s new crop.

This issue is accentuated as traders capitalise on the price inverse between old and new crops.

Meanwhile, West Aussie growers are now shipping malt barley to Victoria in addition to wheat and oats.

Geelong’s Riordan Grains is considering Western Australia as an export source market. And they have indicated they’ll likely be using existing infrastructure such as that belonging to CBH.

Recent shipments from Albany have been delivered to Victoria rather than the northern regions, via Brisbane and Newcastle.

Back on the international stage, United States growers are experiencing a similarly mixed bag of politics, pricing and weather concerns.

Corn growers are experiencing historic planting delays on what is the largest crop on the planet. These delays have also impacted soy and wheat pricing and the market awaits a USDA condition rating report; the first for 2019.

Increasingly, the Black Sea is setting the global standard with the Chicago Board of Trade playing catch-up in a year plagued by delayed and inadequate data from the USDA.

With all these variables at play, it’s heartening to know that some Australian growers have still got something to dance about.

Sarah Woolford

Corporate Broker

Grain Brokers Australia

16^th April, 2019

Farmers in Australia operate in a highly variable environment, and agriculture is considered the most volatile sector in the Australian economy. In fact, the volatility of the agricultural industry is nearly double that of any other industry in the country. With variability and volatility comes risk.

Unfortunately, in life, there is rarely a reward without taking a degree of risk. In farming, risk is an essential part of generating income. Managing risk is about making business decisions that exchange some level of tolerable risk for some degree of acceptable return. Decisions can be made to decrease risk, but that can often result in lower revenues.

To effectively manage risk in their business, grain producers need to understand both the downside and the upside of taking certain risks. In other words, they need to appreciate the potential harm, or cost, of taking a risk and the opportunities that taking that risk can offer.

Weather is commonly regarded as the foremost risk faced by Australia grain farmers. However, the list is long and includes, but is not limited to, production risk, price risk, geographical risk, political risk and credit risk. Diversification in crop type, enterprise mix and property location are three common strategies used to manage income volatility due to production, price and geographical risks.

The need for management of credit risk has been highlighted in recent months with the failure of two grain trading companies on the east coast of Australia in the first quarter of 2019. In each case, market participants are owed many millions of dollars, and grain growers are amongst the creditors.

It is estimated that the grain production sector in Australia has lost more than $50 million in recent years due to the insolvencies of a range of traders across the country. While this is small compared to the gross value of grain production over the same period, it has had an enormous impact on many individual farm businesses who have been forced to write off large sums of money due to the defaults.

Unfortunately, the incidence of insolvencies in the grains industry tends to increase following droughts due to higher grain values and increased price volatility. They also have a habit of occurring in multiples as trading companies are exposed to each other in trade strings and there can be a domino effect when one becomes insolvent and unable to pay their debts.

When a company is declared insolvent, there will be secured and unsecured creditors. A secured creditor is someone who has a security interest such as a mortgage or a charge, over some, or all, of the company’s assets, to secure a debt owed by the company.

Unsecured creditors rank lower in priority than secured creditors as they have no ‘security’ over company assets. In most cases, growers exposed to insolvency will appear on the list of unsecured creditors. Unsecured creditors are at the bottom of the pecking order when it comes to distribution of funds in the liquidation process.

In many instances, growers increase their credit risk by chasing the extra dollar. It is quite understandable that sellers want to maximise their return, but sometimes that extra dollar is just not worth the risk of default. For example, payment default on a 40 metric tonne (MT) b-double of grain at $300 equates to $12,000.

Say the seller’s total grain production is 6,000MT, that equates to $2/MT across total farm production. And that is only one load of grain. Quite often the exposure is multiple loads as contracts are often for many hundreds of tonnes.

So how should grain growers manage credit risk? Selling grain to multiple counterparties will help to spread the risk. Selling grain to the ‘big end of town’ is also likely to reduce risk. However, the best way for growers to mitigate counterparty risk in the Australian grain industry is to take out credit insurance when selling grain.

Credit insurance basically protects growers against insolvency and non-payment by the buyer. It provides the seller with peace of mind with regards to counterparty risk.

In most instances, such credit insurance policies guarantee the seller 90 per cent of the value of the grain being sold. That is an enormous reduction in financial risk exposure for a grain producer, especially when margins are continually being squeezed by increasing costs.

If we continue with the example above, the credit exposure on the b-double load of grain falls to just $1,200, or $0.20/MT across total farm production if credit insurance is in place. An extremely small price to pay for the certainty of receiving payment for 90 per cent of the value of the sale.

The most convenient and cost effective way for growers to access credit insurance is via their grain broker. For growers that don’t use a grain broker, or use one that doesn’t offer the insurance option, then now is the time to seek out a grain broker that does offer the credit insurance option.

In time, such insurance could well become a requirement of farm finance providers to manage their risk and exposure to the Australian agricultural sector. It could even have a cost of money benefit for the borrower.

Call your local Grain Brokers Australia representative on 1300 946 544 to discuss your grain marketing needs

Saudi appears for one last hurrah…
After an absence from the market of more than four months, Saudi Arabia’s state grain buyer (SAGO) finally announced a tender to purchase 720,000 metric tonnes (MT) of feed barley for arrival in May and June 2019. There are seeking offers for delivery of 12 panamax cargoes (60,000 MT) over the two month period.
Saudi Arabia is the world’s largest importer of barley, and they have been absent from the market since early November 2018. The reduced global demand has depressed feed barley prices as global trading houses sought alternative homes for exportable surpluses sitting in the European Union (EU), the Black Sea region, Australia and Argentina.
No doubt this market correction was part of the SAGO strategy as Saudi Arabian consumers utilised above average winter pastures and tapped into state reserves to satisfy domestic demand in the interim.
There has also been a shift in the demand profile for feed barley in Saudi Arabia with purchases of finished feed increasing at the expense of feed barley. These rations provide a more nutritional and balanced diet for the Bedouin livestock. This trend also accounts for the increase in corn imports into the kingdom in recent years.
This will most likely be SAGO’s final feed barley tender of the 2018/19 marketing year which concludes at the end of June. This means it will be the last opportunity for exporters to move substantial quantities of barley before new crop Black Sea exports start rolling in late June or early July.
In the end, SAGO booked 730,000MT for May and June arrival at an average price of US$211.86/MT cost and freight (C&F). The origins offered were Argentina, Australia, the United States (US), the EU and the Black Sea region with the successful seller having the option to choose the origin of the barley that they ultimately deliver.
The final tender price was almost US$55 less than what SAGO paid in their last tender. Argentinian export values have been quoted as low as US$185 free on board (FOB) in the last week and that looks like the most likely origin, particularly for the May and early June deliveries. Both the EU and Australia would be too expensive based on recent FOB values.
The SAGO feed barley tenders have a generous delivery grace period. Basically, successful sellers have the option of taking an arrival date penalty of 1 per cent of the price for each week their vessel is delayed. The cumulative maximum penalty is 6 per cent which effectively means the maximum allowable delay under the contract terms is 6 weeks.
The Black Sea crop has been maturing without any issues and warmer than average weather in early March has favoured early maturity of winter crops. With new crop Black Sea quoted at around US$185 FOB, and the freight advantage over Argentina, barley from that region appears to be well in contention for the June arrivals as delivery could be as late as first half July and still be within contract terms.
The big news out of the US last week was the record flooding in the western Corn Belt, including Iowa and Nebraska which are two of the top three corn producers. This early flooding was caused by rapid snowmelt combined with heavy spring rain and late season snowfall in areas where soil moisture is high.
Some major rivers, particularly the Missouri River, have smashed previous flood records by as much as four feet. What’s more, many of the nation’s well-engineered levees have failed to contain the unprecedented floodwaters. In some areas, ice jams in the river system are exacerbating the flooding.
The flooding is causing all sorts of issues with logistics and grain handling infrastructure throughout the Midwest. Many roads and rail lines have been washed out in Iowa, Nebraska and several neighbouring states. The catastrophe has also destroyed grain being held in storage around the region. Some Midwest growers have been hoping to ride out the US-China trade war by holding their corn and soybeans on-farm in silo bags and on pads, and a significant proportion of those stocks have reportedly been destroyed.
The flooding is fuelling market concerns about late planting and reduced acreage, and there doesn’t appear to be any respite from the rain in the near future. The US National Oceanic and Atmospheric Administration have forecast the flooding to persist in the region through to the end of May.
Should this come to fruition it would leave little time to plant a corn crop within the ideal seeding window. In many regions, it is already being compared to the 2013 and 2015 season when 3.6 million acres and 2.4 million acres respectively were enrolled in the very generous prevent planting program.
Prevent plant crop insurance is purchased by US farmers, and subsidised by the federal government, to protect the potential income from acreage that cannot be planted because of flood, drought, or other natural disasters. On average, the federal government subsidises 62 per cent of the farmer premium.
Prevented planting is a failure to plant an insured crop with the proper equipment by the final planting date designated in the insurance policy, or during the late planting period, if applicable. Final planting dates and late planting periods vary by crop and by area. They are set each season by the Risk Management Agency which is part of the United States Department of Agriculture (USDA).
It is still early days, and modern machinery and planting technology enable grain growers to plant their crop quickly and efficiently when small windows present. Whilst the situation certainly requires scrutiny, it is far too early to write down the corn crop, or write up soybean plantings, at this stage of the season.
Corn plantings in the US are forecast at 92 million acres according to the latest USDA estimate. This is a year-on-year increase of 2.9 million acres but still 5.3 million acres lower than the record of 97.3 million acres set in 2012. The USDA has forecast 2019/20 corn ending stocks at 1.75 billion bushels (44.5MMT) and a stocks-to-use ratio of 11.7 per cent.
The ending stocks number is predicated on a resolution to Don’s Party (the US-China trade war) and a significant lift in corn sales in the last quarter of the marketing year. That said, if ending stocks do get down to that number it would mean the tightest US corn balance sheet since the 2013/14 season.
You can always count on a good weather event somewhere at this time of the year to keep the market on its toes!

Call your local Grain Brokers Australia representative on 1300 946 544 to discuss your grain marketing needs.

Grain Brokers Australia Weekly Market Report
5th March, 2019
Over the thirsty paddocks…
On Thursday of last week, the Bureau of Meteorology (BOM) provided an insight into the weather experienced across the country in the previous three months and released their latest three-month outlook. It has certainly been a summer of extremes with heatwaves, dust storms and bushfires experienced across much of the continent, particularly the eastern states, and then, for parts of northwestern Queensland, unprecedented floods in February.
The temperature summary for the December to February period revealed that Australia endured its hottest ever summer, breaking the previous record set in 2012/13. The mean summer temperature was at least 2ºC above the 27.5ºC benchmark that the BOM considers normal, based on the 30 years from 1961 to 1990.
Early last month the BOM confirmed that January was the hottest month ever recorded in Australia. The mean temperature across the country of 30.8ºC was 2.9ºC above the 1961 to 1990 average. Maximum and minimum temperature records were broken across the country, and the Queensland town of Cloncurry endured 43 days in a row in excess of 40ºC.
In terms of rainfall, a massive part of southern and central Queensland and northern New South Wales experienced their lowest registrations on record. Those districts that didn’t post a record were very much below average. The shrinking Australia sorghum crop is undoubtedly a reflection of these statistics.
Whilst the rest of the Australian winter crop belt traditionally has a winter dominant rainfall pattern, some summer rainfall is quite normal. That has not been the case for the South Australia grain grower this summer where the entire state, save for a small pocket in the lower south-east, recorded below average or very much below average rainfall. The story in Western Australia was much the same.
The hot, dry trend is set to continue for much of the continent according to the BOM’s latest three-month outlook. All districts east of a line from Darwin to Port Lincoln on South Australia’s Eyre Peninsula are expected to have a drier than average autumn (March to May). The Western Australian grain belt is likely to receive average rainfall for the same period.
The BOM suggests that warmer than average autumn days and nights are very likely for almost all of the Australian landmass. They also predict that there is more than an 80 per cent chance of being warmer than the median for both days and nights for most of the country.
Time is running out fast for the winter cropping regions of Queensland and northern New South Wales. These regions have a summer dominant rainfall pattern, and grain growers in these regions rely on the summer wet season to replenish the soil moisture profile ahead of the traditional winter drought. This moisture is critical for the winter crop ahead.
Most districts have now had three consecutive summers where rainfall registrations have been significantly below average. Rainfall, in the two winters sandwiched in between those summers, has also been well below average.
The amount of rain required to fill the soil profile varies depending on the success, or otherwise, of last season’s cropping program. A considerable part of the region in question failed to plant a crop last winter. Some of these areas may only require 100mm of rainfall to join up with the moisture which may be as close as 30 centimetres from the soil surface.
Those who planted a crop, and it managed to struggle into the spring, and even to harvest, will require much more rain as the subsoil moisture level will be much lower down the profile, and therefore more precipitation will be required to join up with the existing deep soil moisture.
The required summer rains could still come, albeit a little late. It has happened many times in the past. Nonetheless, the further we go into autumn the lower the chance. The soils are parched, and there is little or no ground cover, so the first rains need to be slow and steady. However, with unseasonable and extreme weather events now the norm, the biggest fear is that the long dry spell will finish with a big wet.
It is far too early to make a call on the impact of the dry summer on New South Wales and Queensland winter crop production forecasts. Australian farmers are a resilient bunch, none more so than the north western New South Wales grower, many of whom have only had one crop in the last five years. If sufficient rain arrives, the crop will be planted.
Meanwhile, domestic wheat and barley values continued the recent downward trend last week. This appears to have been led by falling United States futures values and trade longs here in Australia desperately looking for export homes. New crop Black Sea harvest is fast approaching.
Open demand ahead of their harvest is diminishing, and the market inverse will make it extremely difficult for Australia to compete in the third quarter of the year without a lot of financial pain. Asian millers have reportedly turned to Argentina for wheat, and there still hasn’t been a Saudi Arabian feed barley tender since November last year.
Western Australian ASW wheat bids fell around $15 across the week, and the northern feed market mirrored that move, down $15 and trading at just under a spread of $100. Feed barley bids in the west fell by about $11 week-on-week. The delivered Darling Downs price closed the week down $15 and is trading at a spread of $106 over the west.
On the other hand, delivered Darling Downs sorghum values were relatively unchanged. The discount to feed barley is now into $20, and the wheat spread closed the week at $50. Again, the diminishing spreads are a reflection of lower sorghum production as a result of the parched summer. However, the resultant increase in demand for Western Australian grain will only absorb a small portion of the long positions currently sitting in the hands of the domestic trade.
Call Grain Brokers Australia on 1300 946 544 to discuss your grain marketing needs.

Will the deal be Don or will pigs fly?

No matter what news source you read, watch or listen to at the moment, China seems to be dominating the daily news cycle, particularly in the rural commodity sphere.

All the talk in agriculture circles late last week was around progress in the China-United States (US) trade deal. Last week’s negotiations went so well that they have been extended across the weekend and work has reportedly commenced on a draft memorandum of understanding (MoU) that will finally put an end to Don’s Party (China-US trade war).

The US and China have been desperate to finalise a deal before March 1, when additional US tariffs are scheduled to be introduced. US President Donald Trump announced on Monday of this week that “As a result of these very productive talks, I will be delaying the US increase in tariffs now scheduled for March 1”. He went on to say that “assuming both sides make additional progress, we will be planning a summit for President Xi and myself to conclude an agreement”.

China is reportedly proposing to buy an “additional” US$30 billion worth of US agricultural produce per year. These purchases would be on top of pre-trade war levels and would continue for the period covered by the MoU. The major bulk export commodities such as soybeans, corn and wheat would be included.

To put this in perspective, in 2017 Chinese agricultural imports totalled US$125 billion. Imports of US farm products in the same year were more than US$24 billion, or 19 per cent of the total. Bulk commodities made up almost US$15 billion, with soybeans accounting for just under US$12.5 billion. Wheat, corn and sorghum made up most of the balance. In 2018, the value of US farm produce exports to China fell by a third, to US$16 billion, as a result of the trade conflict.

Using last Friday’s futures close, the current value of projected US ending stocks for soybeans, corn and wheat were US$8 billion, US$6 billion and US$5 billion respectively. In other words, China could buy the sum total of US ending stocks for these three commodities and still have US$11 billion left over to splurge on other US agricultural produce such as meat, cotton, dried distiller’s grains (DDGs), ethanol, seafood and sorghum.

The MoU under discussion is also believed to cover areas such as intellectual property, non-tariff barriers, technology transfer, telecommunications and services. However, the verification and enforcement mechanisms remain unclear. If past actions are any indication of future behaviour, I have no doubt that President Trump would be threatening to reimpose tariffs if the conditions of the MoU are not met.

The potential impact of such a deal on the US farm sector and US agricultural markets could be huge, as long as the agreement also includes measures to stabilise currency values. US negotiators have been seeking China’s agreement to decrease manipulation of the value of the yuan to gain a trade advantage.

If China does agree to purchase an additional US$30 billion of US agricultural products each year, this is much more than the year-on-year increase in demand. There will almost certainly be collateral damage as a result, most likely the Chinese farmer and other agricultural commodity trading partners, Australia key amongst them.

Early last week the Chinese government outlined its latest rural policy. At its heart are three primary goals: improving rural incomes, improving rural living standards and supporting domestic agricultural production. But agricultural production systems in China are relatively inefficient, primarily due to scale and the tyranny of distance.

In a scenario familiar to many farmers across the globe, Chinese farm incomes have been under threat from rising input costs, rising labour costs, rising freight costs, large inventories and competition for cheaper imports.

The rural policy outlined plans to increase soybean production while stabilising wheat and corn production. In other words, they are aiming to increase total farm productivity. If imports of US soybeans increase in conjunction with rising domestic production, then imports from other global trade partners such as Brazil and Argentina will have to decrease. Ironically, Brazil has been one of the biggest beneficiaries of the recent trade war.

China has long been a traditional market for Australian cereal grains such as barley, wheat and sorghum. While not in the same volumes as soybeans, any decrease in demand for Australian agricultural produce from mainland China will undoubtedly have an impact on competition for Australian exports, and potentially on farm gate returns.

The ongoing barley anti-dumping investigation by China is a complicating factor. Australian barley exporters are waiting in trepidation of a Chinese government ruling that may close the gate on Australia’s biggest barley market. Rumours were circulating late last week that an announcement would be made sometime this week and that it would be quite prohibitive.

Market sources suggest that any trade restriction will take the form of a deposit paid to Chinese authorities to allow the cargoes to enter the country. This deposit will be returned to the remitter if the governmental investigations do not implement prosecutions against Australian barley exporters. A comparable deposit scheme on US sorghum imports last year effectively closed the door to US sellers and foreshadowed an official tariff.

There are a number of Australian barley cargoes currently discharging at Chinese ports, more shipments on the water and the export stem still has barley vessels yet to load with China as the nominated destination. I suspect that the respective exporters will be having a few sleepless nights ahead of the announcement, whenever it may be.

Peter McMeekin is a consultant to Grain Brokers Australia. Call 1300 946 544 to discuss your grain marketing needs.

From the Grain Industry Association of WA:

BARLEY was the big winner in Western Australia’s grain harvest with an increased production of just over 5.1 million tonnes, up 35.1 per cent on 2017.

In releasing its final crop report for the 2018 harvest last Friday, the Grain Industry Association of Western Australia (GIWA) said WA’s final grain yield for the 2018 season was 17.9mt.

This includes the 16.4mt delivered through the CBH network plus on-farm seed and feed requirements and grain traded outside of CBH.

GIWA confirmed that it was WA’s second biggest harvest ever and the most valuable at just under $7 billion.

The end result is somewhat a surprise for the State.

Earlier predictions of 14mt following the dry spring and several severe frost events were eclipsed by a nearly 4mt turnaround over most parts of WA, due to the late soft finish and mild temperatures during grain fill prior to harvest.

Total tonnage for the Kwinana port zone was up 2.2mt from 2017 and Geraldton port zone was 2mt up from 2017.

The Esperance and Albany port zones were both down from 2017 with a decrease of 0.5mt for Esperance port zone and 0.2mt for the Albany port zones, reflecting the poor growing season in the western and northern areas of the Esperance port zone and the east Albany port zone.

According to the GIWA report, the standout crop in 2018 was barley with an average grain yield of 3.19 tonnes per hectare, well above recent averages.

“The percentage of barley making Malt grades was up by nearly 10pc on historical averages, with a record total tonnage produced of just over 5mt,” it said.

Wheat production was an interesting one to come out of the breakdown with only 54pc of the crop area in WA planted to wheat in 2018, which was the lowest on record.

Despite the low plantings, it was also only the fourth time WA has produced 10mt or more of wheat, with three of those years in the past seven years, including a trend over that time of declining area.

Grain weight was high in most regions of WA, a function of the soft slow finish to the season.

Screenings were generally low except for some very high yielding barley varieties such as Planet when grown on the eastern fringes of the medium rainfall regions.

GIWA said in the southern regions of the State there were reasonable tonnages of Malt grade barley downgraded to feed from germ end stain due to rain and humidity during grainfill and prior to harvest.

Wheat grain protein was lower than in recent years, influenced mainly by the dilution from higher than expected yields.

A noticeable recent trend is that wheat grain protein is more likely to hold up on ameliorated soils where crops are more able to use the available soil moisture “bucket”.

This gives growers more confidence in fertilising for maximum potential.

About 40pc of all barley deliveries made Malt grade which is about 10pc more than normal.

The percentage of Malt grade deliveries were nearly 50pc in the Albany port zone, although this was biased by a greater percentage of feed barley production acquired privately in the zone than other regions of the State.

The late start impacted the amount of canola planted, with programs revised and barley went in to replace canola as the break to the season was delayed.

This meant the canola production of 1.45mt was down 23.7pc from what was produced in the previous year.

Canola oil quality was down slightly from recent years and generally lower than expected by growers considering the soft cool finish to the season.

Most oil percentages were in the mid 40s rather than the high 40s.

Canola grain yields were very erratic in 2018 with no single factor influencing the final result and this may have contributed to average oil percentages being lower than recent years.

Lupin area continues to climb on the back of the more determinate rather than indeterminate growth habit types recently released.

GIWA said “new varieties have more suitable adaptation in the southern areas and whilst producing less growth, are very good yielders for grain”.

The only downside is the prevalence of more split seed in the harvest sample, which appears somewhat to be due to variety, and possibly to higher yields requiring more manganese.

Milling oat demand continues to increase and WA’s reputation for producing a premium product was again enhanced with most milling grade oats delivered or privately acquired of very high grain quality.

Field peas continue to be grown in small quantities in the State’s southern regions.

Many crops were hit by frost and produced low grain yields, although in the absence of frost, grain yields were good.

The smaller areas of lentil, faba bean and chickpea are growing, although GIWA said they were still too small to report on.

In terms of the grain pricing, AgFarm WA regional manager Reid Seaby said the market was pretty lacklustre at the moment.

“The market has been very quiet of late,” Mr Seaby said.

“I think given where cash prices were over the harvest period, most guys would be relatively well sold at this point in time.

“WA pricing has eased slightly and new crop prices have fallen away.

“Wheat supplies globally are starting to run out, which might see export demand shift to Australian and US supplies.

“The government shut down in the US has limited USDA reporting recently, but we should start to get a little more clarity on global trends in the next couple of weeks.

“ASW should be well supported, driven by demand to the Philippines and obviously there is still demand coming from the east coast, so the lower grades will be supported by those two factors I would imagine.

“WA is still competitive globally in terms of barley, but there is no resolution to the China situation in sight, so that is hurting export demand.”

Looking forward Mr Seaby said growers were still assessing programs and waiting for an indication of how the season may play out.

“In terms of forward selling, you look at new crop values compared to old crop and growers were getting $400 a tonne for ANW, if you forward sell at $300 it doesn’t seem that attractive right now,” he said.

“But if you look at historical values, $300/t was the magical figure that everyone tries to start their marketing campaign at, with $400 fresh in their minds, however, $300 looks a little bit soft at the moment.

“I would say consultants would be advising growers to take the emotion out of it and focus on their budget and if $300 works for their figures then the advice may be to start there.”