Australia: Sorghum lifts on tariff fall-out

Sorghum values have jumped this week on expectations of increased demand from China in the wake of its tariff on US sorghum.

Despite the anticipated arrival of Tropical Cyclone Alfred late last week, and the downgraded system bringing flooding rain to parts of south-east Queensland and north-east New South Wales, grain markets had little reaction.

Wheat and barley in the northern region and barley in the south traded sideways over the week, while ASW softened slightly to track offshore moves.

Where rain fell on and near the tablelands, farmers will continue sowing oats for autumn and winter fodder, and growers in the grainbelt proper will next month make a start on planting canola and long-season wheat, provided they get ample rain to ensure good germination.

Table 1: Indicative prices in Australian dollars per tonne.

Ex-Tropical Cyclone Alfred brought patchy rain to parts of Central and southern Qld.

Registrations in the week to 9am today include: Clermont 114mm; Dalby 19mm; Emerald 48mm; Hannaford 67mm, and Macalister 66mm.

The rain was ideal for CQ mungbeans and sorghum, and cotton not on the verge of picking.

In northern NSW, torrential rain fell on parts of the coast, inundating some soybean and fodder crops, and most grazing areas on and near the Great Dividing Range had 20-85mm.

Little rain got to NSW cropping regions, with highest registrations including: Condobolin 14mm; Coonabarabran 38mm; Gunnedah 28mm; Moree 7mm; Quirindi 33mm, and Warialda 47mm.

Stewarts Grain trader Robert Quinn said wheat and barley prices have changed little in the past week.

“Generally, growers are slow sellers here,” Mr Quinn said.

“They’re selling when they need to to clean out bunkers or temporary storages.”

Trade sources, Mr Quinn included, believe plenty of grain is still warehoused or stored on farm.

“There’s a lot of unsold grain; prices are low based on where they’ve been in the past three years.”

Away from the Downs and Brisbane, where rain from ex-TC Alfred wreaked havoc on supply chains, consumers, including feedlots running at or near capacity, are seen as comfortable with their coverage for the near term.

As TC-Alfred neared the Qld coast, export terminals and most feedmills closed on Thursday.

The system was downgraded to a tropical low and crossed the coast north of Brisbane at 9pm on Saturday.

In terms of supply chain, its major impact was to delay the delivery of bulk sorghum to three Brisbane terminals, and torrential rain in the Lockyer Valley closed the Warrego Highway, which links the Darling Downs with Brisbane, for much of Monday and Tuesday.

“Some of the bigger stockfeed guys…saw a few nervous moments on the Downs and Brisbane,” one trader said.

With the southern Qld sorghum harvest just about over, the trader said boxes and bulk are back to moving to port at pace after the flooding interruption.

“Containers are starting to move, and trucks are starting to move now that things have reopened.”

“Growers want to get into mungbeans in the next week or two, so they want to make room for them in their on-farm storages.”

China’s tariff on US sorghum has buoyed chances of Australia increasing its market share to what is already its biggest market by far, and growers and exporters have been willing sellers.

“Growers are feeling they’ve sold enough now, and will wait until after June 30 to sell more; that’s something that comes up in nearly every conversation with a grower these days.”

While the Central West of NSW and much of the eastern Riverina has good subsoil moisture, much of Victoria’s and South Australia’s grain-growing regions, as well as south-west NSW, need soaking rain ahead of winter-crop planting.

Only light and very patchy falls were recorded south and west of north-east NSW from ex-TC Alfred.

Delta Grain Marketing general manager Mick Parry said recent rain has been “very disappointing”.

“West of the Newell (Highway), Alfred was a non-event,” Mr Parry said.

“The western Riverina is very dry, Victoria’s dry – it’s serious – but east of Wagga, Temora, and Forbes is good.”

Grower selling remains thin, and has allowed prices to hold, with domestic consumers the ready buyers of what has been coming to market.

“The Aussie consumer has been consistent with demand, and the delivery window is widening; March has been covered for a little while, and they’re now into April and May.”

“Exporting has really slowed in the last month, with the expectations of tariffs, and uncertainty around that, and more since the (Trump) Administration has made its moves.

“Broadly, it’s not terrible news for Australian growers.

“We’ve still got a cheap currency, and magnificent quality.”

On wheat, Mr Parry said Australian basis has improved relative to world pricing.

“US futures have dropped A$35/t or more, and we’ve dropped more like $10-$12/t.

“Arguably, a sale today is better value for the grower than it was a month ago.”

While the spread between SFW wheat and feed barley has narrowed, Mr Parry said it was still considerable.

“Barley’s still cheap compared with SFW; the gap has gone from $40/t to $20, and I’m surprised we haven’t found a lot of Chinese demand for the barley.”

Mr Parry said export demand in NSW’s Pork Kembla zone has been strongest so far for SFW then APW wheat, while in the north, demand has been strongest for SFW and high-protein APH2.

Driving those markets have been bulk sales from vertically integrated operators with their own up-country sites and export terminals, and trains to link them.

“Logistics has been holding the market up; it’s been about keeping the trains full.”

Tags: sorghum, China, barley, US, wheat, tariff, demand