In the 10 years since Australia’s wheat export market was deregulated there has been immense growth, change and opportunity witnessed by the nation’s grain growers. It’s been a period of remarkable transformation, and one which leading independent grain marketing and advisory business, Market Check, has played a major part in.
The abolition of the single desk selling system has opened new doors for Australian farmers over the past decade, with increased demand and export opportunities stemming from the growth in exciting new markets, particularly throughout South East Asia.
But since deregulation in 2008 there has also been immense global risk and Market Check is proud of the business it has built by helping growers navigate this dynamic new marketing environment and managing these risks with its independent market-leading advice and marketing options.
It has now become obvious to many growers that the correct mix of marketing options must be implemented each season to maximise returns. An example of this in New South Wales is illustrated in the chart below:
- Combined Annual Return for 2016/17 Strategy
But to know which options to take, growers must continuously monitor regional and global supply and demand dynamics and understand the relative pricing of grain both within Australia and other grain producing countries in the world.
Market Check is an independent, Australian-owned business offering year-round grain marketing services to Australian farmers. Its grower-allied position and wealth of experience has ensured unwavering commitment to family and corporate grain producer clients for more than 20 years. Long-term committed client partnerships are the core of its operation, striving to empower Australian growers through an innovative and collaborative approach to grain marketing.
These programs underpin the company’s core focus of maximising returns for growers through a diversified mix of marketing options and pushing Market Check to continually innovate its own business in response to the needs of farmers.
There is no one size fits all so Market Check offers a range of grower advisory services and marketing options to suit all growers reflecting its sophisticated understanding of the globalised marketplace where local prices are affected by global factors every day.
Market Check is a business which has grown significantly over the past decade, from grain marketing education to now actively managing over 1.4 million tonnes of grain annually. Timely advice and market research are still major functions for Market Check which has a committed research program cutting to the source of current market intelligence to better inform growers and their own business.
In response to the rapidly changing and globalised marketplace which has emerged since deregulation Market Check opened ‘Strategic Programs’ – part of a suite of managed pricing programs giving growers access to low-cost, derivative-based marketing strategies traditionally utilised by traders.
The programs are a clearly defined managed program arrangement with articulated strategies, informed by a market-leading global research platform with correspondents across all major grain and oilseed producing and consuming countries guiding innovative grain marketing strategies.
In recent years Market Check has invested in its global research platform and cloud-based grain marketing systems (MyMarketCheck) to allow growers real-time access to its reporting, strategies, market analysis and research notes.
Market Check founder and managing director, Brett Stevenson, attributes his company’s growth story to more growers outsourcing their grain marketing to companies like Market Check due to the increased risk and the expertise required to operate in a truly globalised marketplace.
“The old days of the grower turning up at the silos at harvest and being told “here’s a competitive price” are really diminishing,” Mr Stevenson said. He believes the Market Check approach tips the scales from the global trading powerhouses in favour of the Australian grower, making them more money from grain than if marketing it themselves.
Mr Stevenson says the success of the managed programs, and in particular the flagship Strategic Program, grew from farmers trusting in the company’s marketing strategies but often lacking the time or expertise to execute them themselves.
“There are other companies in the market which offer pools and are completely undefined about the strategy – where growers just give the grain to them but don’t know what the company is going to do with it,” Mr Stevenson said.
“We define very particularly what we do when we manage grain for growers through our Managed Programs,” he said. “Ten years on and growers have overwhelmingly acknowledged their faith and trust in the Market Check strategies. We are independent, we aren’t trading our own book and those two things combined have helped the business to grow.”
How Market Check is working for Australian Growers
Market Check advocates a marketing mix which may include a combination of forward selling or hedging, harvest selling, holding flat price or hedged grain post-harvest, and incorporating options both pre-harvest and post-harvest.
Since 2008, Market Check has made it clear to growers that the Australian wheat market has in reality only been partly de-regulated. To guide the industry on a pathway to full de-regulation, all bulk wheat port access issues were initially governed by the Wheat Export Marketing Act 2008 which was replaced in 2014 by the Port Terminal Access (Bulk Wheat) Code of Conduct. The Code of Conduct, governed by the ACCC, essentially requires major port operators to guarantee open access to their supply chains for their grain merchant competitors.
It means since 2008 there has been strong competition at the ports from a multitude of international export and domestic buyers which is fuelling demand for Australian wheat. Demand for Australian wheat should remain strong on the back of growth in Asia where by 2030, 88% of the
next billion entrants into the middle class are expected to be living. (Kharas, 2018)
At harvest, as seen in the chart (below), Australian wheat prices relative to the global benchmark – widely accepted as the Chicago Board of Trade wheat futures price – fall, or the basis falls. This is due to increased selling at harvest for cash-flow or logistical reasons, but as can be seen post-harvest in the chart, Australian wheat prices strengthen relative to CBOT wheat futures also known as a lift in basis, or stronger basis.
Melbourne seasonal basis chart
Capturing the basis lift post-harvest is a big part of the value Market Check has been giving back to Australian growers through its innovative post-harvest hedging strategies. These strategies are implemented on behalf of Australian growers in its actively managed ‘Strategic Program’ which pools grain together to access lower wholesale execution fees.
Market Check has made no secret of their impressive returns for the portion of grain its growers allocated to the Strategic Program, the merits of which only become stronger as exporters consolidate and retreat from the farm-gate and independent marketers like Market Check step in to help growers navigate the truly globalised Australian grain marketplace and facilitate trade with buyers.
Call a Market Check advisor today on tel: 02 9499 4199 or go to this link: