WA’s bumper harvest: CBH’s booked-out 17Mt shipping stem could leave 4Mt of grain with nowhere to go

CBH is trying to work out a way to export more than four million tonnes of grain not allocated in its booked-out shipping stem after an unprecedented 21.5Mt of grain was delivered to its upcountry sites during the 2021-22 harvest.

The 4Mt — nearly a third of WA’s five-year average 14.2Mt — could be left as carryover in CBH Group’s storage system by the time the 2022-23 harvest rolls around if it cant be exported or sold domestically by the end of September.

CBH acting chief operations officer Mick Daw said the co-operative had embarked on its biggest shipping program in history, with 17Mt of grain allocated to shipments between October 1, 2021 and September 30, 2022.

He said it was now trying to work out what to do with the remaining 4Mt.

Mr Daw said there was “already demand” for another 2Mt of WA grain and CBH would try to bolster its shipping capacity.

“The amount of capacity booked at the moment is about 17Mt, and the previous biggest year we have had (shipped) is 15mt.

“There is already demand for an extra 2Mt, and there is demand over and above that as well.

“We are working out how we maintain and deliver on that 17Mt, and once we are confident, how we increase that.”

Mr Daw said CBH’s shipping stem from its four ports, at Geraldton, Kwinana, Albany and Esperance, was fully booked until the end of CBH’s shipping calendar on September 30 and there had not been any capacity for next year “released” yet. CBH normally releases shipping slots for the following year in August and September.

He said it was unusual for CBH’s shipping stem to be fully booked so far in advance.

CBH’s shipping program is busiest between January and June, before quieting down as the northern hemisphere’s crop is sold.

“We haven’t released any first in and first served yet (for after September 30), but it is something we are looking at,” Mr Daw said.

CBH had a difficult year for shipping last year after its vessel turnaround times blew out to as much as 30 days in April — well up on the four day target — and the co-operative racked up a $17 million demurrage bill across the year.

It attributed the disruption to train and truck driver shortages that meant grain could not be shifted soon enough to meet shipping commitments, resulting in tens of millions of dollars in demurrage and damage to Australia’s reputation as a reliable supplier.

In October, the co-operative assured growers it had rectified the issues and its four ports — Kwinana, Geraldton, Albany and Esperance — were operating as expected, with average turnaround back to about four days.

Mr Daw said the grain supply chain had started the year “really well” and road contractors had “hit the ground running”.

The co-op has negotiated new contracts, including road transporters and new above-rail contracts with Aurizon, which provides additional rail capacity and certainty.

“We have done a lot of work with our contractors during the past six months, to make that more sustainable,” he said.

“The rail transition is the other piece we have been focusing on, and we are still working with Aurizon to ramp that up.

“Aurizon came on board early, before the big crop, and to help us through that.

When asked what the plan was for the remaining 4Mt of grain, Mr Daw said it was a “good question”.

He said CBH would like to start the 2022-23 harvest without 4Mt of carryover grain already in bins but had to work within the supply chain and shipping stem capacity.

“There are 230 days until next harvest, so for us, we have started to look at what that means and we have to make sure we don’t have that carry over to impact the next harvest,” he said.

Mr Daw said he hoped CBH would be able to ship more than 17Mt and there was a “lot of work going on in that space”.

“We are working with our customers and staff to make sure we can do that, and looking at more options,” he said.

“There is plenty of demand to sell it.

“There are a lot of opportunities and we don’t want to see the turnaround times increase and blow out like they did last year.

“The focus is on the original capacity we have offered. We want to ramp that up but if we can’t, there will be a large carry over.”

“Our challenge is to bring that down as much as we can, while the demand is there.”

CBH Group called time on its harvest deliveries on February 3, announcing the total amount of grain delivered to the co-operative had smashed the 2016-17 harvest receival record of 18Mt.

Mr Daw said CBH was considering options to access more trucking capacity across WA, with rail “at capacity”.

“Rail is at capacity and there have been a few challenges here and there with the rail and there are bushfires in the Avon Valley and heat restrictions give us some challenges,” he said.