Already wildly volatile grain markets are swinging even further in Australia due to the Aussie dollar's fluctuations.
The dollar has been moving in unprecedented amounts – with swings of up to seven cents a day possible.
An indication of the level of volatility is highlighted in the business sections, which now specify at what time they get their figures for the Aussie dollar – as it could have changed markedly by the time the paper hits the streets.
This is making life difficult for Australian grain marketers – who could see swings of up to $60/t a day in canola prices just from the fluctuations in the foreign exchange rate.
AWB general manager of Australian commodities Stuart Richardson said it is a challenge to keep track of the swings.
"It is very volatile, there is no doubt about that, and it is difficult to manage – however we have been there before," Mr Richardson said.
"We don't want to say that we know better than anyone else, but we are aware of the need to manage foreign exchange.
"We look to control our exposure through swaps and options and other management options – it's tough to manage, but we try to keep it under control."
He said one of the big difficulties is the lag in cash prices reflecting the foreign exchange situation – meaning that prices are being altered during the day.
Mr Richardson said farmers would have to get used to pricing being altered several times a day, rather than having three or four days with little movement in the market, as has been the case in the past.
Foreign exchange is not the only issue creating volatility – Mr Richardson said futures markets continued to trade in a wide range – while buyers are also factoring in local supply and demand factors in order to get prices to a level where growers will sell.
Commonwealth Bank executive general manager of agribusiness Jon Sutton said farmers had to plan for the volatility.
"We are living in extraordinary volatile times and growers will have to make sure very good advice, particularly around harvest," Mr Sutton said.
He said the role of independent advisors would become more important in managing risk for growers and ensuring they were aware of marketing opportunities – especially given the likelihood of smaller windows of opportunity to access prices.
Meanwhile, the grain market has spiked slightly in the past week, a move mainly attributed to supply and demand issues, which are becoming clearer as the southern hemisphere harvest gets under way.
AWB increased its estimated pool returns for the prime hard and hard wheat grades, while other major grades remained unchanged, leaving the benchmark APW Grade for the AWB Eastern Pool at $326/t FOB and the Western Pool at $323/t FOB.
Mr Richardson said global grain markets had stabilised in the last two weeks, partly in alignment with broader financial markets, but also in line with supply and demand fundamentals, which were becoming clearer as Australia and Argentina moved into harvest.
"Wheat futures have finally found some support in the past fortnight, recovering from recent lows," he said.
"While the global picture has not really changed, the massive re-adjustment in wheat values which has occurred over the past six months appears to be slowing down," Mr Richardson said.
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