Interesting post, the stock to use ratio will be the same as...

Interesting post, the stock to use ratio will be the same as last year for wheat and barley even though wheat and barley production will be lower from last years record crop (nothing fixes high prices like high prices). Market is actually paying carry for 18months +, which indicates that it does not want / need the grain right now. There will be 100 million tonnes of wheat and barley in stocks after this northern hemisphere harvest and Aust harvest 2009/10 (can only assume average rainfall - fingers crossed). Anyway market comfortable at the moment, if however we have an issue in the north or south then we start to tighhten very quickly, market to firm. the market also has come to understand that if surplus is in "exporting freindlly" countries the grain is easier to aquire, which is a sign of the times.

The $aud is firming which is placing pressure on the grain price, but on the flip side good for imported inputs, so it may make some of the fertilizers cheaper?? and with the springs in certain australian areas being touch and go the last few years there will be growers who are gun shy of spending to much on inputs. there is also a drop in demand for in certain industries (malt baley - less beer, feed barley - export grade beef, you get my drift and these are real) feedlots around aust are average 50% capacity, dairy farmers are less inclined to up the feed as the milk returns are lower than last year, malt barley demand is lower with chinese malting houses at 50% capacity and building up malt inventory. This will change as the whole economy picks up and we see some consumer discresionary spending on the non staple foods.

In another post(s) there has been discussion on people starving, food shortage etc. There is starvation, no question but the food has been there, sitting in inventory somewhere in the world that for various reasons did not go to the needy, its all about the dollars, got to have something to bargin with, only so much band aid can provide.

As mentioned nothing fixes high prices like high prices, hence the massive acreage planted last year, the increased interest of farming in eastern Europe, south america etc there is plenty of productive land that is untapped at this stage for food production, but its all about investing in countires that need political understanding infrastructure spending to export. Another major influence is the introduction on GM crops, i am sure that a hungry person would not choose b/w the two, so market forces will encourage GM crops, and then we may have parts of austrlia which are marginal cropping ares to safe cropping areas, who knows??