Can Australian farmers count on more cost relief from the oil price?

Our agricultural community depends on oil and the recent plunge in price has been a much-needed cost break, but how long will prices remain low?

Oil Price Plunge

Prices started to tank in earnest in the final months of last year, with the WTI crude oil price peaking in 2014 above US$110 and recently falling below US$50. Goldman Sachs is predicting lower oil prices are here to stay, reports Tony Randall on Bloomberg. The bank released an analysis this week confirming the large supply dump flooding the market in the second half of 2014 combined with a fall in demand in December and January.

Why is the Oil Price Falling?

Goldmans have quantified the supply and demand effects by linking the relationship between the US stock index, the S&P 500, with the price of oil. In simple terms, when stocks move in tandem with oil price rises, then oil demand is driving prices since higher stocks indicate a strong economic outlook. When the oil prices and stocks move in opposite directions then the oil price is driven by supply. The relationship was demand driven leading up to the recession of 2008. Supply expectations then remained stable until the beginning of 2012 when US shale oil production started to outstrip expectations. This culminated in last year’s oversupply shock.

Oil Price Outlook

Goldmans is predicting a three-month outlook for WTI crude at US$41, six-month’s at US$39 and a 12-month outlook at US$65. Some US analysts are predicting oil prices will continue to go even lower. Chief oil analyst at Oil Price Information Service, Tom Kloza, has forecast WTI crude could get as low as $30 before it rebounded. Kloza is predicting that it won’t bottom until the second quarter of the year with shale oil to blame. Kloza’s outlook isn’t as low as Citigroup, which have suggested WTI oil could get as low as US$20 a barrel.

Longreach Shines with Aussie Spirit

Longreach Associated Grain and Seed Donation

Associated Grain delivers donation to drought affected families at Longreach

 

As many of you would know Queensland is suffering from one of the worst droughts in living history. With over 86% of the state officially declared drought stricken it’s taking a toll on our hard working farmers and their families.

Fertile pastures have turned to dusty red soil plains and river banks have dried up and worse still communities have struggled to feed their families simple foods like fresh fruit and vegetables that the rest of us take for granted.

Longreach, which sits in the middle of Queensland in one of the driest parts of the state, has become somewhat symbolic of the drought affecting the livelihoods of these small towns.

Longreach associated grain donation
After becoming aware of one of our staff members direct connection to the people of Longreach and with Christmas fast approaching, we felt it was only right for us to do what we could to help ease the burden on these families who work so hard year after year to provide for the rest of Australia.

 

So, late last year we got together with our staff here at Associated Grain and our friends at Betros Bros & Beauty with Perfection to raise donations. We drove our rig, fully loaded with donations, out to Longreach to make the delivery and see first hand how these Aussie battlers were defying the drought to keep their communities going.

 

Longreach drought donationWe had the privilege to meet some wonderful farming families at Mt Victoria Station, approximately 45 min drive from Longreach. We met 9 of 11 families that day with some neighbours travelling over 80 klms to be there.

What we saw that day was a small community coming together. Some neighbours had to travel over 80 klms just to be there.

 

A little background information for you; The sheep station we stayed at is 43 thousand acre. There is no grass for the sheep to feed on just stones and dirt. In an average year they can run 5-6 thousand head of sheep, in a very good year 10 thousand head.

Since the drought worsened in May last year they have been hand feeding 1800 sheep every second to third day.

These are people with big hearts and an even bigger Aussie spirit. It’s people helping people, and it was wonderful to see.

Longreach grain donation
Thanks to the generosity of the business, our staff and friends, we were able to give each family:

1 box of donated food and personal items,
1 box of Christmas goodies, Fruit and vegetables,
Seed and grain to help feed their livestock,
Plus a range of other donated goods.

 

Toys were also divided between the two families with children.

After all the hard work was finished a BBQ lunch was supplied and people socialised. I can’t explain how much of an emotional time it was for all.

I think it’s important to thank a few people who helped make this possible.

To Melissa and Nic who helped me with the fresh fruit and Vegetable decisions thank you for your patience, kindness and thoughtfulness.

 

Thank you so much to all the Associated Grain staff who gave cash and goods. Thanks also to Ken Kummerow for the lend of the lead trailer and fuel card and to Betros Bros and Beauty with Perfection for their donations and support.

 

LongreachAll of the donated food was divided up and went home with the families and you could really see in their eyes what this donation meant to them….. ALOT.

If only the rest Australia’s population had a pinch of the toughness, steely commitment and true Aussie Spirit that I saw in the folks out at Longreach!

We look forward to visiting our new friends at Longreach again albeit under better circumstances.

Visit the Associated Grain Facebook post where you can see more photos of the trip and can leave a comment.

Agrocorp Processing Australia expands their market share

market-share-team-shotThe booming chickpea and mungbean industries are driving increased throughput at Agrocorp Processing Australia’s Dalby-based seed and grain processing facilities.

The rapid growth of the company over the last three years has culminated in the need to employ more staff to service the growing demand from growers and buyers.

Managing director, Todd Jorgensen said that the upgrading of the factory’s unloading and processing facilities, along with secure payment capabilities, has enabled the company to increase their market share, particularly in their mungbean, chickpea and planting seed lines.

“Our growing ability to service more customers means that we have been able to create three new positions in the management level of the company and we are thrilled to announce that we have attracted three highly skilled and knowledgeable people to fill these important roles,” he said.

Within the last month, Agrocorp Processing Australia has welcomed Mark Schmidt, James Sage and Jacquie Borham to complement the existing team and further cement the company’s reputation for high quality customer service and product delivery.

“Mark Schmidt has taken up the role of Trading Manager, bringing a wealth of experience in grower purchasing, production, exports and management,” said Mr Jorgensen. “Mark has been previously recognised by the Produce Merchants Association as the ‘Young Merchant of the Year’ and by the Australian Mungbean Association for his ‘Significant Industry Involvement’. He is also the current president of the Australian Mungbean Association.”

Mr Schmidt will be drawing on this depth of skill and experience as Agrocorp Processing Australia looks forward to the record chickpea harvest expected to come off over the next few months. High prices this season will reward growers for their commitment to pulses.

“Chickpea varieties have come a long way in the last 10 years with new varieties offering greater reliability, higher yield and improved disease resistance,” he said “Looking forward to next winter, the newest variety, PBA Seamer, looks very impressive and should be the number one variety to plant.”

Agrocorp Processing Australia is expecting a solid spring-plant of mungbeans and a large summer crop. Mr Schmidt is looking forward to handling the bigger volumes that represent significant growth in the Australian pulse industry, and offering growers a complete package of advice, seed, contracts and delivery.

Jacquie Borham, has moved from Agrocorp Processing Australia’s seed sales team to the role of Grain buyer and Logistics Coordinator with the trading team. Ms Borham will be buying grain and coordinating intake. She has the distinct advantage of being well-known to the company’s existing grower base and is very familiar with all product lines. Ms Borham will also be supporting Shane Mathieson, Mark Schmidt and Todd Jorgensen as the accumulation team prepares to handle the expected increase in volume in the seasons ahead.

Mr Jorgenson accredits much of Agrocorp Processing Australia success to the company’s focus on high efficiency intake, increased storage and large export and loading capacity.

“To continue along this path we have engaged James Sage as Production Manager for our facilities, drawing on his extensive background in cropping, feedlotting, management and international feedlot consulting,” he said. “James will take care of the daily running of the three sites and staffing to constantly improve efficiencies and out turn.”

Looking to the future,Agrocorp Processing Australia has contracts in place for the upcoming chickpea harvest and are taking seed orders for next year. Many chickpea crops have been challenged with endemic disease this year andAgrocorp Processing Australia expect strong interest in the limited stock of the new variety PBA Seamer. Spring mungbean contracts are available now and high quality seed is on hand for planting.

More information: www.associatedgrain.com.au or phone 07 4669 9500

Singaporean global agri-commodity trader invests in Associated Grain, Dalby

Left to right: Vishal Vijay (co-owner), Shane Mathieson (grain trader/operations) , Mark Schmidt (grain manager), Saul Martinez (production manager), Todd Jorgensen (CEO), Ravi Raghavan (co-owner), Vijay Iyengar (co-owner), Geoff Birch (seed manager), Bhuvan Gandhi (director).

Left to right: Vishal Vijay (co-owner), Shane Mathieson (grain trader/operations) , Mark Schmidt (grain manager), Saul Martinez (production manager), Todd Jorgensen (CEO), Ravi Raghavan (co-owner), Vijay Iyengar (co-owner), Geoff Birch (seed manager), Bhuvan Gandhi (director).

 

 

 

Dalby-based seed and grain company, Associated Grain, is delighted to announce the sale of the business to Agrocorp International.

Agrocorp International is a global agri-commodity trading business, founded in Singapore in 1990. Since its beginning, Agrocorp has grown substantially with offices in 14 countries including Canada, China, Turkey, India, Ivory Coast, Myanmar, and now Australia. It sees an annual trade volume of 9 million tonnes across commodities such as grains, pulses, sugar, oilseeds, cashews and cotton as well as trading revenues upwards of 3 billion USD. In pulses, Agrocorp is one of the world’s leading buyers with more than 1.5 million tonnes traded in 2016.

Associated Grain’s Warrego Highway grain site.

Associated Grain’s Warrego Highway grain site.

Agrocorp started its processing business in 2012 and currently owns and operates four pulse and wheat processing facilities in Canada, and has just opened a rice mill in Myanmar. Further plant builds are planned over the next year in Canada, India and Bangladesh.

Agrocorp has made a significant commitment to new infrastructure at the Associated Grain, including an additional 2400 mt of storage capacity at the Warrego site, and several other projects are planned.

With the addition of the Associated Grain business, Agrocorp will now bring international markets directly to Australian growers. This will further enhance opportunities for farmers in Queensland and NSW, providing a strong direct link into the primary markets of the Indian sub-continent.

Left to right: Vishal Vijay, Vijay Iyengar & Ravi Raghavan (Agricorp International co-owners) and Todd Jorgensen (CEO).

Left to right: Vishal Vijay, Vijay Iyengar & Ravi Raghavan (Agricorp International co-owners) and Todd Jorgensen (CEO).

Agrocorp has historically been one of the largest buyers of Australian chickpeas and this acquisition will give direct access to the end users of their products as well as the ability to supply timely and high quality market information.

Associated Grain advises that Mr Todd Jorgensen will stay on in the business as CEO.

Todd brings a wealth of experience and knowledge to the Agrocorp team having managed Associated Grain for the last 20 years. Key staff at Associated Grain, including Shane Mathieson, Mark Schmidt, Jacquie Borham, and now Patrick O’Hara, will continue to work on the grains team, and Geoff Birch and his team will continue to operate the seeds business.

Crucial attributes of the Associated Grain business model, such as quality service and prompt payment, will be maintained as an integral part of the operation.

Associated Grain recently celebrated 60 years in business and the partnership with Agrocorp secures a bright future for the company’s staff, customers and growers.

More information: www.associatedgrain.com.au or phone 07 4669 9500