Bunfight for grain ship slots
CBH and a battery of international big guns have started a bidding war over the export of this season's grain harvest, which will see millions of dollars gambled to secure individual shipping slots.
The blind auction run by Tradeslot started yesterday, with 20 million tonnes of demand from exporters and CBH offering 14.1mt of shipping capacity at its four WA port terminals.
The huge demand comes amid predictions the above-average harvest will reach 14mt at best and could be as low as 13mt.
CBH raised the auction stakes last week when it abandoned plans to offer grain traders long- term port access agreements in the face of criticism from within the industry about the system for allocating prime shipping slots.
Three newcomers - representing China's COFCO, Japan's Mitsubishi and US co-operative CHS - and eight other traders had agreed to LTAs subject to approval by the Australian Competition and Consumer Commission. It is believed all 11 traders and others are now bidding for market share against CBH's trading and marketing arm in an auction set to drag into next week.
Industry experts tip premiums for prime shipping slots at Kwinana could break the $40 a tonne mark. Exporters would have to stump up more than $2 million to secure one 50,000t shipment.
The money is held in a pool and repaid quarterly but the exporter loses it all and is hit with hefty penalties if it cannot buy enough grain from growers to fill the slot.
It is a high-stakes game that contributed to US grain giant Gavilon flying the white flag in WA last year after losing an estimated $50 million over two years.
Traders estimate up to 25 per cent of this season's harvest is pre-sold. Growers are now holding back because of a dip in price.
Industry experts said the auction system, combined with moves by the Federal Government to exempt CBH from a mandatory port access code, would increase the likelihood of overseas investment in port infrastructure in WA.
"If people don't get what they want and it is costing them a huge amount of money and risk, they will look at investing," one said.
Chinese interests and multinationals Cargill, Bunge and Louis Dreyfus have invested in WA grain infrastructure in the past two years, with Bunge opening a port terminal at Bunbury.
