Choose wisely when seeding?
The Snapshot
- This time of year, decisions are being made regarding planting intentions.
- Do you make this decision based on price?
- You definitely should not base this on price.
- There is very little relationship between the price at seeding and harvest.
- If you are deciding between wheat and barley, it doesn’t make much difference.
- Plant what is going to work best for your soil and conditions.
The Detail
The decisions on what to plant for this season will be made soon if they haven’t already been made. It is important, but forget about the market when you are making the decision.
Every year, I get asked by many, from farmers to agronomists, the following; “What crop is going to get me the best price at harvest?”.
It’s a good question, but in truth, there is no real answer.
Let’s look back at history.
The charts below show the change in price from seeding to harvest for each of the past 23 years. There is a chart for ASW and one for F1 barley.
We can see the sheer range of pricing between the two periods. There is no real relationship or consistency. The price of grain can dramatically change in the months between seeding and harvest.
This tells me that the price at seeding has a relatively insignificant impact on the price at harvest. It could end up higher or lower.
One of the questions this, specifically, is whether you should put more barley into the rotation instead of wheat. This is in light of China’s reentry into the Australian barley market.
The answer is to do what you want.
If we look back at the past 23 years of barley and wheat price changes from seeding to harvest (charts below), we can see that they will generally show a very similar price reaction.
To put this into perspective, the correlation between ASW and F1 barley is very strong.
- Kwinana – 0.88
- Darling Downs – 0.94
- Victoria – 0.94
A perfect correlation is 1, and no correlation is 0. These are as close to perfect as you can expect.
In simple terms, the price of barley and wheat generally react the same. That being said, I expect barley prices to return to more normal spreads from wheat this year.
So what should a farmer do? It would be best if you listened to an agronomist you trust and concentrate on what will grow best for your conditions – don’t worry about the price that is available at seeding for two reasons:
1. You are not going to sell all your grain at seeding, so other than for a conservative volume, it’s irrelevant.
2. The price might be high at seeding and lower at harvest or low at seeding and higher at harvest.
