Online Grain Markets

Compare the various online grain markets with each other.

April 14, 2016
MarketingGrain
  1. Clear Grain Exchange

  2. An online grain exchange that allows buyers & sellers to transact in a simple, secure & transparent market.
  3. Where does it operate:
    NSW, VIC, QLD, SA, WA
  4. Cost:
    $1.00/mt
  5. Platforms:
    Desktop Website, Mobile Website
  6. This product is for you if:
    You have warehoused grain at GrainCorp on the East Coast, VIT and GrainFlow in SA, or CBH in WA.
  7. Overall Rating

  8. More Info
  1. Igrain

  2. Igrain is an online grain trading platform designed specifically for the Australian grain industry.
  3. Where does it operate:
    NSW, VIC, QLD, SA
  4. Cost:
    $2.75/mt
  5. Platforms:
    Desktop Website
  6. This product is for you if:
    You have grain stored on-farm or at a non-GrainCorp warehouse on the East Coast.
  7. Overall Rating

  8. More Info
  1. GrainCorp GrainTransact

  2. Sell Grain via GrainCorp's 'Cash at Silo' website.
  3. Where does it operate:
    NSW, VIC, QLD
  4. Cost:
    Free
  5. Platforms:
    Desktop Website
  6. This product is for you if:
    You have grain warehoused with GrainCorp and are looking to sell over the harvest period.
  7. Overall Rating

  8. More Info

When looking to sell your Grain online there are still only a few options available to Australian producers. This comparison blog covers Australia's main online grain markets that allow growers to transact with multiple buyers in the one marketplace.

The Clear Grain Exchange

The largest of these is The Clear Grain Exchange (CGX) which was founded in 2008 and to date has traded over 3.4 million tonnes. CGX has three main transaction types; growers selling physical warehoused grain, growers selling forward contracts (added in 2014), and traders selling physical grain to traders.  

CGX has a sophisticated market with transparent offers, bids and trades all public on an anonymous level, and an automated trade matching mechanism similar to that of a stock exchange. One of CGX's biggest advantages it it's secure settlement process where growers retain title to their grain until payment has been received from the buyer, all of which occurs within seven business days.  

In 2009 CGX entered into an exclusive arrangement with GrainCorp on the East Coast making it completely seamless for GrainCorp growers to be able to view their available grain and instantly create an offer on the exchange without having to perform any title transfers. This has meant that CGX has created a stronghold on the East Coast and is trading the majority of it's volume in this region.

CGX has always had a small presence in SA, however in 2014 this presence was ramped up with the implementation of a simplified model that allowed growers to create offers on the Exchange prior to having to transfer title to the secure Custodial account.

In 2014, CGX entered into a marketing agreement with DailyGrain in WA that has meant it now has a growing presence in the West, although still early days their volumes are growing each year.

CGX has significantly grown the number of buyers using the exchange with over 72 buyers purchasing grain in the 2014/15 season. There appears to be a reasonable number of buyers who post daily firm bids, however a lot of buyers still wait and see what offers are available and then cherry pick the offers that work. This in many ways has limited the exchanges growth as there might often not be a completive firm bid available to growers, meaning they need to create offers and wait for the traders to come to them.  

Igrain

Igrain was established one year later in 2010 and to date has traded over 1.8 million tonnes. Igrain has no limitations as to where the grain is stored, meaning that it is able to trade on-farm grain as well as warehoused grain in both the grower physical and forward markets. Igrain publicly list, on an anon nous basis, all offer and trade prices.

Igrain is essentially an advertising website where growers can list parcels of grain they have for sale, and buyers can then negotiate on the price via the website (although it seems the majority of negotiations is still done over the phone by the Igrain team). In 2013 Igrain added non-payment insurance to all of it's transactions to overcome the growing concerns of Farmers regarding trading with smaller traders. The insurance covers growers for a percentage of the lost income only in the event that the buyer declares bankruptcy between the time the contract is made and payment is due.

Igrain stared in NSW (head office in Bathurst), where they still have a strong presence, and has expanded into VIC, QLD and SA.

Due to their being no bid side to the Igrain market it is hard to judge the amount of buyers supporting the system, although with their growing volumes it appears to be gaining reasonable support.

GrainTransact

GrainTransact is the evolution of the rational GrainCorp 'cash at silo' board where you could sell on the weigh-bridge, that seems to have been around for ever. In 2013 however GrainCorp updated their systems to allow growers to warehouse the grain first and then accept a bid posted on GrainTransact anytime afterwards. This has meant a significant increase in the practicability of the product as the person in charge of the grain marketing often isn't driving the truck anymore.

Although no trade volumes (or prices) are published it is believed that somewhere near as much as 10% of all GrainCorp deliveries are transacted through this service. The uptake is largely due to the majority of large traders posting firm daily bids over the harvest period making the price discovery and transaction process pretty simple. However, it is a case of sellers beware as the prices posted can often have a 'risk margin' factored into them so often a small premium to these prices can be achieved by contacting traders directly and accepting their published contract prices.

The usability of this website is also worth a notable mention as it is, in my view, one of the poorest user experiences out of any grain company in Australia and is well overdue for an upgrade. That being said, it still performs the required task which is getting your grain sold.  

Others

It is also worth mentioning that in WA, growers have access to DailyGrain, which is a product run by CBH that is primarily used for price discovery but also allows for online contracting with buyers. This product has however been included in the Price Discovery Comparison Blog, as currently there is a complete lack of buyers utilising the online contract component of this service and the majority of buyers (including CBH) choose to just post indicative bids.

It is also worth noting that an increasing number of buyers are now allowing some form of online contracting via their websites, however as this is just transacting with one buyer, these have not been included in this blog as they are not open marketplaces.

Summary      

If you're looking to try an online market, I would recommend:

If you have warehoused grain at GrainCorp; I would recommend first trying the Clear Grain Exchange due to it's ease of use and fast, secure payment process. If you have created an offer at a fair market price on CGX but don't seem to be getting buyer activity, I would then suggest checking GrainTransact's competitiveness. If both of these seem to fail, you I would then use Igrain.

If you have warehoused grain with the other bulk handers on the East Coast, Igrain is the best online tool to utilise.

If you have grain warehoused at any bulk handlers in SA and WA, I would suggest giving CGX a go as it is starting to gain some traction and achieving good trade prices. If you can't seem to get any traction on CGX, falling back to your traditional channels is probably your only option at this stage.

If you have grain stored on-farm, Igrain is your go to and is providing a great service in this space with the ability to advertise your parcel of grain to a large list of buyers with the payment being covered by insurance.

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Blog Author

Tristan Shannon

Tristan is the founder of The Digital Farmer and Virtual Unity, a consulting business that assists companies in creating the pathways between great product ideas and technical implementation. 

Tristan was formerly the Manager of Australia's largest online grain exchange, and developed Australia's largest grain price discovery platform.

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