HIGH demand for feed grain has sorghum prices looking strong and has been further compounded by the drought depleted crop and underpinned by China’s thirst for baijiu, the country’s most popular spirit.
On Tuesday sorghum delivered Newcastle was trading at $356 a tonne which is about $20/t dearer than this time last year.
Ag Scientia grains analyst Lloyd George said last week’s 20 to 30 millimetres across the Liverpool Plains freshened sorghum crops and would boost yields.
But, he warned the countryside remained parched following months of below average rainfall and blistering heat.
“Most of the Liverpool Plains’ sorghum crops are still four to eight weeks away from harvest so will benefit from follow-up rain in the next week or so,” he said.
While a shortage of feed grain across the eastern States was driving prices up, Robinson Grain trader Adam Robinson, Dubbo, said the combination of factors at play for sorghum had made it overpriced by $20 to $30 a tonne, compared to other feed rations.
However, he said at this stage the market was being driven by expected export demand.
“Sorghum is at a very strong premium compared to wheat and barley in NSW and southern Queensland,” Mr Robinson said.
“It looks like this crop will be well below average this year, growers didn’t get the moisture to plant and there were poor conditions during the growing period as well.”
NSW is expected to record its smallest crop in almost 20 years, with 364,000 tonnes.
Earlier in the season, the national crop was forecast to yield 1.3 million tonnes, compared to average production of 2.2 million tonnes.
Mr Robinson said the late season rain should improve later crops, but the damage for early crops was already done.
“We are expecting to see poor yields, low screenings and test weights in the early crops,” he said.
Aglink trader Justen Schofield, Dubbo, estimated the recent rain was too late for 70 per cent of the sorghum crop.
As a result he said now the trade was predicting the crop to fall below one million tonnes.
“Given there’s a shipping program of at least 150,000t of bulk exports out of Central Qld, into traditional markets, this will put sorghum into a domestic deficit,” Mr Schofield said.
He said sorghum in the Central West had been trading above Hard (H2) quality wheat with prices at about $290/t on-farm.
“The deficit will be compounded by the demand into China.”
Last year, in an unexpected move, China took a whopping 400,000t of sorghum from Australia and the demand looks set to continue this year.
In China the sorghum is fermented into Baijiu, a clear, whiskey-like class of liquors, which accounts for nearly 99 per cent of the spirits consumed in that country.
Mr Schofield said the big question for growers and traders alike was “will this demand be sustained?”
“The signs appear to be positive, as shipments of this season’s crop had already sailed into the Middle Kingdom,” he said.
Mike Foley
Senior journalist for The Land.
Senior journalist for The Land.
