Many growers are reluctant sellers at current grain prices, particularly in the Eastern States.
This reluctance has created a stand-off in Australian grain markets resulting in less grain being transacted because price expectations between growers and buyers have been someway apart.
Yet the amount of grain that will be exported and consumed domestically this year has not been bought from growers.
This means more grain needs to trade.
Demand for Australian grain remains robust and is building as time progresses without significant trade activity.
At the same time many growers are requiring cashflow.
Rain in many parts of Australia is providing moisture for next year's crop, but it requires weed management and adds to farming expenses.
Hence at some point growers need to sell their grain.
A principle of being a seller in any market, whether it be real estate, shares, or grain, is to avoid being a forced seller whereby you need to sell because of cashflow requirements.
The reason to avoid being a forced seller is because if you "need to sell", you may be selling into unfavourable market conditions and having to accept buyer bids regardless of the price.
The key objective is to keep grain sales ahead of cashflow requirements.
While this can be easier said than done, growers can adopt a simple yet effective practice.
Offer their grain for sale to the market well in advance of when they need to sell for cashflow.
In Western Australia, growers have actively embraced this strategy by proactively listing their grain for sale at prices they find acceptable to sell.
This approach has seen positive results with a majority of grain trading in Australia being in WA as buyers have adjusted their bid prices up to match grower offer prices.
Conversely in eastern Australia, where bid price falls have been more pronounced, less grain is trading.
But there is also less transparency around prices growers are willing to sell for.
Rather than waiting for buyers' bids to come up to a price level where you would sell and then engaging the market, growers have opportunity to be proactive and show all buyers their sell price.
If growers don't tell buyers their sell price, how do buyers know what price they need to bid to buy volume?
Bid prices of many grades in eastern Australia are below equivalent prices in WA.
Growers have a say in grain prices and the more transparent growers make their sell prices, the more impact it has on Australian grain prices as evidenced in Western Australia currently.
For more information or to see what values are trading contact Clear Grain Exchange on 1800 000 410 or support@cgx.com.au