Grain Wrap | China’s ‘trade war’ could lift sorghum rate

China’s ‘trade war’ could lift sorghum rate


Commodities are on the up, while stocks are plummeting.


COMMODITIES are on the up, while stocks are plummeting. 

These were the main themes from last week, with the latter dominating headlines for the most part. 

But with global share markets under pressure, there were a few key headlines in commodity circles that may prove interesting during the coming months. 

Firstly, the Chinese investigation into US sorghum exports, or as others see it, the developing US/China trade war. 

China has launched an investigation into US sorghum exports during a four-year period (2013-17), on the basis of anti-dumping and anti-subsidy issues, courtesy of the United States. 

Most see this as only half the story, with many pundits believing this is in retaliation to US imposed tariffs on Chinese made goods, such as solar panels. 

Whichever way you see it, this may prove pivotal for Australian sorghum which has a renewed life after continued dry weather and solid domestic demand on the eve of the Queensland harvest. 

If we do find additional Chinese demand, this will add further upward pressure to this market due to  dwindling Australian carryout this season. Continue to watch this space.

Another major talking point last week, was the US Department of Agriculture’s World Agricultural Supply and Demand Estimates, released Thursday night Australian time.

The report was somewhat bullish for almost all major commodities. 

And although world wheat production was up 1.2 million tonnes (bearish), consumption was dramatically higher by 3.1 million tonnes, primarily on the back of an increase in Chinese consumption (bullish). 

The futures market took a hit after the report on Friday morning due to lower US wheat exports, and subsequent higher US ending stocks, sending futures lower. 

But there is enough bullish consensus in the wheat market currently, that if we see any major hiccups in the northern hemisphere, we might not be trading range bound for long. 

The continued dryness across the US southern plains could be the catalyst. 

We can only hope.


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