AEV 13.3% 1.3¢ avenira limited

record canola price

  1. 84 Posts.
    I have read with interest many views on MAK and its potential. I am new to HC so hear are mine for what its worth.
    The price of canola hit $872.10 today for forward sold 08-09. This is a new record, a record which at the moment is being broken quite regularly. Canola is not alone all grains are heading north. We have a new era in grain prices, the smallest negative weather event somewhere in the world produces panic in grain markets. ie China last week.
    Initially when i bought MAK in early January I was convinced the world farmers have the ability to resurect dwindling grain stocks. I am now convinced they do not not! As a farmer we are told millions of acres are locked away in reserve schemes in countries like the USA where farmers are payed a subsidy to not grow grian crops. Oviously those areas will come back into production as farmers profits from grain will be far more more than the subsidy on offer. What I wasn't aware of was the massive amount of land being taken by urbanisation in Asia. Rabobank(probably the biggest ag bank) has studied this phenomen in depth and released its findings at recent grower meetings. It has concluded the increased area into grain production for 08 is minimal and is definately not sustainable.
    Where does this leave us? I now have no doubt on average grain production world-wide we the cannot lift grain inventories in the next five years. Demand is huge and underpinned by a massive push for so called green fuels ie Ethanol and Bio-Diesel. Also, we have at least another 70 million mouths to feed a year. Given the huge amount of time it takes to breed a higher yielding plant and the lack of GM adoption by countries which have been scared by an emotive argument and forgotten to actually look at the science. The farmer is left with one option and that is to use higher rates of phosphate fertilizer(the building blocks of a plant)to give increased yeild. In the past farmers haven't had the confidence to push the boundaries as more exposure to risk with deflating returns seemed irresponsible.
    Australian farmers will now get used the high price of fertilizer once they have had the opportunity to capitalize on these fantastic grain prices-many haven't yet drought being the main factor. If all farmers world-wide use 10% more phosphate there will be no chance of current operations providing for that increase in demand. We arn't nearly using enough phosphate on our oilseed crops, we haven't had the confidence in prices. That has now changed! For the misinformed there is absolutely no substitute for phosphate and the notion of organics to save the world makes me laugh. Organic grain production is not sustainable and only depletes limited reserves of nutrients in the soil-I have digressed sorry.
    Where to for MAK? If this company gets this mine off the ground I am convinced the sky is the limit. For me its all about the management. Can they do it I ask? I believe they can and so do alot of farmers who are buying and arn't really worried about the price because it is a great hedge against rising fert prices. Oh and one other point farmers will bottom draw MAK as they will want to be part of the story.
    Just my ramblings, promise my future posts will shorter!

 
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