News that China had cancelled its anti-dumping investigation into United States sorghum saw domestic prices tumble, earlier this week.
China initiated the investigation in February and soon after imposed a 178 per cent bond on US sorghum, effectively shutting the gate on imports. It was a tit-for-tat escalation of the trade dispute currently gripping the two countries. US sorghum sales to China ground to an immediate halt.
Australian sorghum was an immediate beneficiary of China’s decision to shut out US imports.
The trade spat between the China and the U.S. was good news for Australian sorghum growers, offering a window of opportunity to capitalise on record prices following a disappointing harvest.
Shipping stem reports show that at least two sorghum vessels have sailed from Newcastle and they are almost certainly heading to China.
Sorghum prices jumped from around $300 Newcastle in early February to $370 late last week before news of China’s decision to remove the roadblock to US imports was announced. Exporter bids declined by $10 a tonne to $360 Newcastle after the announcement.
NSW farmers appear to have already sold the majority of this year’s sorghum crop. Shipping stem reports show that at least two sorghum vessels have sailed from Newcastle and they are almost certainly heading to China.
Ongoing dry weather has wheat and barley prices pushing even higher despite the recent decline in sorghum. Records continue to tumble as the prolonged dry weather across eastern Australia intensifies with Darling Downs feed barley hitting $400 a tonne last week.
Darling Downs feed grain prices have jumped by $20 a tonne last week, having rallied by more than $50 in the past four weeks as buyers step up efforts to secure supplies. This comes at a time when most east coast farmers are still waiting for the traditional autumn break which is starting to look more like a winter break.
High Southern Queensland and northern NSW grain prices are magnets for the entire east coast and south-east Australia, pulling supplies from Victoria and South Australia. Grain from the Victorian and South Australian Mallee is being trucked to Southern Queensland, pulling it away from normal domestic buyers and export markets. Grain is also being regularly railed from Crystal Brook in South Australia into Moree where it is being trucked into Southern Queensland markets.
Soaring prices are also expected to encourage coastal shipments of wheat and barley from South Australia and possibly Western Australia to Brisbane.
United States wheat futures ended last week sharply higher as global markets pay more attention to the desperately dry conditions in Australia which is jeopardising the outlook for the 2018 crop. Benchmark CBOT wheat jumped by around 5% on Friday as forecasters predicted the dry weather could extend well into winter.
Australia’s Bureau of Meteorology released its extended weather outlook for the winter months which was sobering. The outlook for June to August predicted below average winter rainfall for Western Australia’s grain growing regions. The forecast also pointed to below average rainfall for large areas of eastern Australia in June and July. The Bureau said that broad scale climate drivers, such as El Nino and La Nina, remain inactive. In the absence of these broader drivers are more localised influences.
