Using accurate data to minimise your risk in the commodity market

Who we are

Lachstock was founded in 2007 as a result of the deregulation of the grain market. The grain market experienced changes to procurement, distribution, product release and an increase in grain price volatility. With more participants and products hitting the market the buying and selling of grain became a complex process.

Using accurate research and market analysis, we take the complexity and noise out of the commodity market.  We tailor our commodity advice to your personal requirements, setting reasonable personal targets to increase profitability but also reduce risk. Opinions are great, but we use the data!

Lachstock Consulting holds an AFSL #320 562 to provide advice to wholesale clients on derivatives and foreign exchange.

Who you are

We adapt our commodity marketing services to meet your needs within the grain industry. Whether you are a corporate business looking to improve business strategies, a farmer who grows grain or a grain consumer looking to lower your outgoing costs, we have a solution for you. Through market analysis we aim to reduce cost, reduce risk and thus improve your margins.

Commodity Research and Advice

Example Barley Supply & Demand Report

Lachstock

9th September 2020

Barley take aways:

  • Australian barley production increased to 500kmt to 10.4mmt. WA -150kmt to 3.79, SA +200kmt to 2.5mmt, VIC +100kmt to 2.23, NSW +300kmt to 1.8mmt. NSW and VIC remain excellent, WA still needs rain to finish and the race of more rain vs. warmer temperatures is on
  • Old crop feed increased 300kmt on the back of the changes made in wheat last week
  • Exports are slowing up in SA, but Stocks in WA and SA remain very tight. Viterra stocks at 1st Sep were 202kmt and CBH was 552kmt
  • Australia remains very well priced for new business and there has been a lot of new crop business booked already
  • Globally we reduced Canadian production by 350kmt to 10.6mmt due to drier August weather, Ukraine unchanged @ 8.3mmt, Russia unchanged at 18.3mmt, EU unch @ 62.6mmt, Argentina -50kmt to 3.55mmt. Old crop China also increased 300kmt, all ex-EU business that had been booked and shipped
  • Exports see an extra 1.3mmt of China imports, to 6.8mmt with large business being done between Argentina, EU, Ukraine and China. Along with continued strength in domestic China corn values
  • Saudi Arabia imports are up 300kmt, largely with increase in Australia
  • Saudi Arabia (SAGO) hasn’t tendered since last tendered 16th July, where they bought 725kmt Optional Origin. With prices firmer and large commitments made to China, the next tender will likely price off Australia and will be tight for a new crop shipment period, with the last tender being 1-15 Nov

Australian barley

Australia’s season is hanging on ok, there is some rain forecast for southern growing regions over the next 8 days, but WA remains on the outer. WA remains a concern if September heat arrives before more rain. NSW on the other hand is in fantastic condition and yields will be well above average.

The SA and WA stock situation has largely played out now. We have some strong lineups in the west for September to finish the campaign, but SA is all but done.

SAGO has currently tendered out to 15th of Nov, right on the cusp of Australian new crop. VIC does have surplus in the old season and there may be the odd WA cargo that could go, but the proof will be in the pudding in the next tender when Australia will be front and center to price the deal. Albeit right on the cusp of new crop. With Ukraine & EU well committed to China at higher values, and Canada not allowed to participate it will create a tight situation for SAGO to manage until new crop is available from Australia. Then there is the question of farmer selling and the trade’s willingness to potentially short the tender in hope of accumulating from the Aussie Barley grower during harvest. At these prices this is not an easy call to make, its expected farmers will instead focus on selling canola and keep their powder somewhat dry on barley. No doubt its a catch 22, Australia needs the Saudi business so timing will be everything.

Domestically, the drawing arcs are interesting. QLD is not pricing a premium enough to drag large volumes north and the rest of the country is pricing export parity pretty nicely. With a crop not yet made in some parts and a firming global price, support should be strong here for barley prices (leaving the AUD aside).

Global barley

Globally there has been a few adjustments to production, but for the most part we are locked in now. The main focus has been on strong demand exports. We have mentioned the strong depth of China buying interest from all origins and also the willingness of SAGO to sit out of the market. The ongoing aggression from the Chinese importer is being supported by strong domestic corn prices, with very high import margins for corn and barley. Something that large scale corn imports is not yet solving, and then Typhoons that seem to be damaging the domestic China production is also not helping.

This leaves SAGO looking in the rear-view mirror, wondering what to do next. How long can they let the China train keep going and when we do see them come back in, how tight is the Nov/Dec window going to be before large scale Aussie harvest has commenced. To early to say the squeeze is on but there are some decisions to be made for sure.

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