Low dollar helps grains

Falling dollar has helped combat COVID-19 grain impact

Coronavirus
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Grain prices bouyant on back of falling dollar.

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WATCH AND WAIT: GrainGrowers chairman Brett Hosking says his organisation is taking a "watch and wait" approach, given the rapidly changing situation over coronavirus.

WATCH AND WAIT: GrainGrowers chairman Brett Hosking says his organisation is taking a "watch and wait" approach, given the rapidly changing situation over coronavirus.

The falling Australian dollar has cushioned the impact of coronavirus, on grain prices.

Victoria and parts of south-east South Australia experienced a strong season following timely spring rain.

That resulted in a 10 per cent rise in grain production in Victoria, when compared to average production over the past 10 years.

It was the only state to record an increase on average production and wheat prices were now trending around $350/tonne.

Victorian Farmers Federation Grains Group president Ashley Fraser said COVID-19 has had minimal impact on grain prices, as deliveries continue to operate in an almost normal fashion.'

He said the only change was additional hygiene measures being implemented by most domestic delivery points, for end-users and ports.

"If anything we've seen a $20/mt or so increase in spot prices recently due to a low Aussie dollar and strong domestic demand," Mr Fraser said.

"Because of the low dollar new season's prices are very attractive at the moment as well and I have heard of some forward contracting with reliable counterparties has already occurred." said Mr Fraser.

"With good soil profiles and more rain forecast in the next few weeks I expect many growers will be very busy over the next two months or so putting in this year's crop.

"This will mean access to on-farm grain will be restricted."

Read more: Currency moves drive up futures

Grain prices are expected to remain firm for some months unless there is a significant appreciation in the dollar.

GrainGrowers chairman Brett Hosking said prices had picked up, and wheat was trading up to $350/tonne, translating to $380-385/tonne delivered to port.

"That's on the back of the falling dollar," Mr Hosking said.

Pandemics also caused nations to pay closer attention to food security.

"But food security is one thing we don't have to worry about," he said.

The only concern was freight movement, transporting grain to dairy farmers, ports, feed and flour mills.

"We don't mind if the government call us an essential service, or not, we just want supply chains kept open," Mr Hosking said.

"There's a lot of uncertainty right around the globe, and the one thing we know is our markets hate uncertainty."

As it was a constantly evolving situation, he said groups like GrainGrowers were adopting a "watch and wait" attitude.

NAB senior economist Phin Ziebell said boats were still leaving and logistics flows had not been seriously affected.

"It's always possible shipping may come to a halt, but that's unlikely" Mr Zeibell said.

He said the price was "very respectable.

"That 10 cent drop in the dollar is going to have a very supportive impact.

"If you can produce it you are doing your country a big service, at the moment, because food security is a big thing

"A lot of countries don't have it and we do."

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