THE grain trade is characterised by a low level of cash trading this season.
Growers consider grain prices too cheap and are generally storing grain in warehouses or on-farm for deferred sales.
This has lead to some price premiums for those who want to sell off the header into the prompt markets.
In fact it has been five years since feed-barley prices have been this low.
Since December 2005, prices for feed barley delivered to Melbourne have been much higher, spending many months at more then $300 a tonne.
Barley prices hit a high of $440 a tonne delivered to Melbourne in October 2007.
Production of malting barley this season has been poor and the increased production of feed barley has placed pressure on prices.
With the majority of the harvest complete, there are many reports of light-yielding grain crops.
Barley yields are generally considered lower than expected.
Crops that looked like they would yield about five tonnes per hectare actually yielded more like three tonnes.
Prices for feed barley are now down to $160 a tonne delivered to Melbourne or the Goulburn Valley.
Due to the drier conditions and lower yields in the Riverina, prices for barley are higher at between $160 and $170 a tonne delivered to local buyers.
While barley prices are low at present, there appears to be a floor in prices.
Indicative export prices for feed barley to world markets are sitting about $6 a tonne below current levels delivered to port.
Grain traders will be keen to buy feed barley from Australia that is competitive to other origins.
Other domestic markets are waiting to see how low barley prices can go.
In a reversal of roles, feed grain from Victoria may be cost competitive into markets in southern Queensland.
In many years sorghum is trucked from farms around Dalby and Goondiwindi to stock feed mills around Melbourne.
This year however, months of dry weather and lack of winter grain production has meant that prices for sorghum and feed barley have been as high as $235 a tonne delivered to buyers on the Darling Downs.
With feed barley trading at levels of $100-$120 a tonne ex Victorian farms, it may be possible to freight barley from Victoria to Queensland.
As growers withhold their grain from the market in southeast Australia, grain traders have been switching their shipping programs from the eastern states to Western Australia.
This has created a secondary market for grain in Western Australia. Traders have set themselves aggressive shipping programs with commitments to costly grain-loading slots at port.
These shipping commitments will ensure an active market where positions will be switched between different states according to where the grain is available.
In other export news, Egypt continues to buy wheat cheaper than prices in Australia and the US.
Last month Egypt bought 300,000 tonnes of wheat from Russia and a further 60,000 tonnes from France.
Wheat export sales from the US are 28 per cent lower than this time last year.
