Bright future for Australian feed grain growers

The future for feed grain producers in Australia looks bright with demand remaining high and the constant uncertainties of supply set to keep prices above historical averages, according to a report issued Monday (August 10) by Rabobank.

But feed grain prices are likely to be more volatile in a deregulated Australian wheat export market as the global economy recovers, it said.

Although demand has slowed this year due to the global economic downturn, there are a number of factors that should sustain feed grain prices, the report's author, Rabobank analyst Adam Tomlinson said.

"The demand for animal protein globally remains at high levels. The growing world population and rising incomes in developing countries have led to greater demand for animal proteins and increasing global animal production for food," he said.

Rabobak expects feed grain prices to remain above a long-term average and to track sideways into 2010, Tomlinson said.

The major challenge facing Australia's feed grain industry is the unpredictable Australian climate and the impact of drought years on feed grain production and prices, he said.

Australian feed grain demand has grown 50 percent to about 9.0 million tonnes a year over the past 10-15 years, he said. Major grain types used to feed livestock include wheat, barley, sorghum, lupins and oats.

US mandates for biofuel production have sent more corn - the world's major livestock feed grain - to be processed for ethanol, boosting demand for corn and putting upward pressure on prices, he said.