This season is the one that keeps throwing curveballs. Between the late start to the season, too much water in some instances, a dry July and now too much rain, weather has well and truly impacted our production cycle.
Given this harvest is looking likely to stretch into January for some growers, now represents a good time to get your book in order and develop a plan for harvest. Where should you start?
Get your contracts in order
Before we get too far into harvest, now is a good time to get your contracts in order. This means conducting an audit on what is actually contracted, the spreads, delivery periods and destinations for the grain. Having all of this in an easy to access place or spreadsheet can help with communication between the rest of the harvest team and the grain marketer within your business. This makes decision making about which way to turn the truck out of the gate much easier to work through.
With multiple different supply chains or delivery sites, this also adds to the complexity to deliveries over harvest. It will be important to keep track of what supply chains need what tonnages to avoid having to renegotiate a contract and where it is to be delivered.
With harvest getting later, this potentially further constrains the budget or overdraft facility. While harvest is still in the easy stages, it may be a good time to map out when income can be expected to hit the bank account. If under pressure from pre-payments of fertiliser or chemical, take a look at the contracts already in place or look at other buyers with shorter payment terms. This is one option to cover the incoming costs.
Keep in mind that if there is a good run-on harvest and a lot of selling activity, payment terms may become wider to allow the trade to manage their own cashflow. Currently there are some premiums on offer for longer payment terms, if cashflow is not a concern.
With the frontal systems that keep coming through, delivery for some people is getting pushed later and later. This adds a level of complexity to when contracts can be delivered against if the crop isn’t even out of the paddock yet. Some areas of South Australia are likely to only see some grain leave the paddock in the last week of December, at the latest, due to the late start to the season and dry July and August periods.
This adds further complexity through some early shipping requirements needing to be filled by the trade, but potentially not the grain in the system to fill it. Previously, an inverse market has developed where November delivered grain trades at a premium to grain delivered in January. We’re starting to see this develop on typically early crops such as lentils.
One of the challenges that come with a wet harvest is potential quality and logistics issues, so what is the backup plan? Is there a nurse bin or shed where off spec grain can sit for a short period of time until a market can be found for it? This small window of time can allow an alternative market to be found or a different delivery option. This can potentially limit the discount received, which is important in a season where a lot of inputs have been applied to the crop.
Paddock accessibility will also be a factor to have a backup plan for. How do we manage truck access if the paddock or roads are still wet? This may include silo bags or alternative points of access for loading. The backup plans mean the show can still go on without spending time and energy, in the moment, solving problems that have already been thought through.
Don’t forget next season
All that can be assumed for next season is average production, with some growers going into next year with decent subsoil moisture. What we do know is input costs are likely to remain elevated and there is no guarantee for current pricing continuing well into next year. So now potentially presents an opportunity to engage with good prices in line with the grain marketing guidelines and risk profile of your business.
Overall, grain marketing for this season has thrown up a number of different obstacles to face. However, the finish line is in sight and, although there are still some challenges to getting the crop out of the paddock, focus on what you can control around harvest. There are still plenty of opportunities for profitable harvests, and these challenges have been faced before. Now though, take the time to plan and think about what you need in place before headers start to roll.