Additional 10m tonnes of port capacity added in grains sector in two years

Ole Houe, Ikon Commodities, said there had been a big increase in capacity, with more port export players stepping into the ranks, with total capacity up in excess of 50 million tonnes, representing an increase of around 25 per cent in just two years, with 10m tonnes of capacity added.

Total Australian grain production for the record 2022-23 season, according to the Australian Bureau of Agricultural and Resource Economics and Sciences was 67.3 million tonnes for all winter grain crops, however prior to the past three years the largest crop was the 56.7m tonnes of 2016-17.

Normal total Australian winter crop tonnages are traditionally regarded as being between 30 and 40 million tonnes, meaning there is now capacity to move well in excess of an average year in a single marketing year.

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Ikon data showed the big three bulk handlers, CBH, Viterra and GrainCorp moved over 30 million tonnes between them in the 2021-22 marketing year, but equally noteworthy was the rise of smaller port operators.

"You have smaller businesses like Riordans in Victoria and T-Ports in SA and they are doing more and more and we're seeing big grain traders like Cargill do things like use mobile ship loaders in Adelaide, so there is a lot more happening outside that traditional space," Mr Houe said.

He said the new flexible, lower cost port capacity would continue to play a role even in years of lower volume.

"It will not necessarily be the case that exporters will just shift back to those traditional port providers, the new capacity has come online because it is very competitive and it is likely to continue to do so in many instances, even when is more shipping capacity available to the exporters."

Ikon is predicting plenty of grain to keep exporters busy once again in 2023-24 with an opening estimate of a winter crop of 55m tonnes, in spite of forecasts of a drier than average growing season.

The large bank of subsoil moisture, particularly down the east coast, is one of the main reasons the company remains upbeat about above average yields.

Wheat and barley will hover at around 20 per cent above the ten year average, while canola will continue to consolidate on the gains made over the past five years and sit 35pc above the 10 year average, in spite of plantings dropping year on year.

In terms of opportunities for potential investors in port infrastructure Mr Houe said the Ikon data showed the most scope in WA, where it will take just over six months to move an average sized crop, compared to two and a half months in Queensland and just under four months in NSW.

"The CBH network is Australia's largest grain exporter and has a big upcountry receival network to support the ports but there has been talk about other companies investing in the region despite having to go up against that integrated supply chain."

He said while the focus had been on port investment the role of bringing grain to port also had to be considered when talking about investment.

"It is no use having all the capacity in the world at port if you can't move the grain efficiently from upcountry to the port."

"We've seen businesses invest in exporting systems but we'll also see more focus on upcountry supply chains, we recently saw Manildra buy train sets and there could be other moves to help move grain, both for domestic and export use."