International Agriculture News

‘Dramatic’ turn wetter in Australia’s weather boosts sorghum prospects

The “quite dramatic” turn wet in the eastern Australian weather may have come too late to prevent wheat production falling to a 10-year low, but it is improving prospects for sorghum production.

Nidera Australia said that a 1.8m-tonne Australian sorghum harvest, as forecast by the official Abares crop bureau, was now “easily” possible, after rains returned to New South Wales and Queensland, after a period when some areas received record-low rainfall.

“The change in seasonal conditions throughout northern New South Wales and Queensland has been quite dramatic since the beginning of October,” flagging the development of “a hint of optimism across the entire agricultural sector”.

“Late last month, many growers in the region were wondering if it would ever rain again after the winter-long drought had extended through September,” said Nidera Australia, part of the China-based Cofco ag trading empire.

“Now they are wondering if the tap will turn off for long enough to let the winter crop harvest resume, and the sorghum plant commence.”

‘Slowing drydown’

Indeed, “if the favourable conditions continue, then more than 2.0m tonnes is achievable” in Australian sorghum production.

A crop at that level would represent a doubling on the 1.02m tonnes produced last season, and the biggest crop in three years.

That contrasts with expectations for Australian wheat output which remain weak, despite the recent rains, which are deemed to have arrived too late to bring much benefit to crops which are already mature, with development often accelerated by dry weather.

Indeed, the precipitation could deliver a second blow to wheat growers, in delaying harvest and threatening quality.

Rains expected this week in Queensland, New South Wales, and Victoria “will improve soil moisture, but will not significantly improve yields as wheat growth is finishing up”, said weather service MDA.

“Persistent rainfall in Queensland is now slowing maturation and drydown of the wheat crop.”

Feed needs

Earlier this week, National Australia Bank, while acknowledging the recent rains, cut by 1.4m tonnes to a 10-year low of 18.7m tonnes its forecast for Australia’s wheat harvest.

A crop at that level would be down nearly 47% from last year, when ample rains helped the harvest to a record result.

Still, the prospect of a doubling in sorghum output looks like limiting the potential for wheat prices, in offering an alternative for Australia’s feed users.

“The poultry sector is already looking to maximise sorghum inclusion in their ration,” said Nidera Australia’s Peter McMeekin, noting that the discount of the grain to wheat, delivered in Darling Downs, had soared from Aus$15 a tonne to Aus$65 a tonne over the past six months.

While demand prospects for sorghum from feedlots remained “unknown” – given that cattle fare best on a consistent feed mix, and that there is historically some mistrust over Australia’s sorghum output volatility – a large crop and a “juicy price incentive” meant that their switch to the grain “is likely to happen”, Mr McMeekin said.

‘Voracity of the Chinese alcohol market’

Even so, the country will still likely to produce enough sorghum for export, including to China, where Australian supplies are typically used for making the liquor baiju, with US imports by repute used more for feed.

“A big crop almost certainly means that exports will need to happen out of the Brisbane or Newcastle zones,” Mr McMeekin said.

“The final quantity will depend on domestic production, the voracity of the Chinese alcohol market and our competitiveness into that export pathway.”

There has been talk of China’s baiju industry recovering from a slowdown thanks to a four-year campaign against corruption, and abuse of entertainment budgets.

Pasture revival

The volume available for export may also depend on whether Australian rains prove sufficient to repair pasture condition, and allow livestock farmers to cut feed buy-ins.

NAB agribusiness economist Phin Ziebell said that “there has already been a partial recovery in cattle prices because of the rain in Queensland,” with the eastern young cattle indicator at 555.75 Australian dollar cents on Wednesday, up 9.9% since ending September at a two-year low.

“But much of the country remains very dry and pasture availability ahead of summer is by no means guaranteed.”

Source agrimoney