First sorghum harvested in CQ

Peter McMeekin, Nidera Australia origination manager, January 10, 2017

As the winter crop harvest winds down in the south of the country, the summer crop harvest commences in the north with the first loads of sorghum coming off spring-sown paddocks around Springsure, in central Queensland, last week.

The main sorghum planting window for central Queensland has only just opened with the spring-sown area generally minor in comparison. The good falls of rain recorded over the past week have been gladly received, however, most of the region still requires 75-125mm of rain, before the sorghum planting can proceed in earnest.

Conversely, in southern Queensland and northern NSW most of the sorghum crop is normally spring-sown and the harvest is fast approaching. The spring rains created havoc for the winter crop harvest particularly chickpeas, but it meant that this year’s sorghum crop went into relatively good moisture. Nevertheless, the in crop rainfall has been quite variable leading to prolonged dry periods that have stressed the crop in many regions. The saviour here to some degree has been the lower than average temperatures throughout the growing period to date.

The huge area sown to chickpeas last year and the relatively low forward price for sorghum compared to previous seasons has seen a 25-30 per cent reduction in the area forecast to be planted to sorghum in the 2016/17 season. However the price of sorghum is high relative to its competitors into the domestic feed ration.

This is leading to a push/pull scenario between production and demand. On one hand planted area is being reduced as the price is not encouraging growers to maintain or increase planting intentions and on the other hand, the domestic consumer is removing sorghum from rations altogether (feedlots) or reducing inclusion rates, as the price is high relative to cereals (poultry and pork).

The one area of demand that is increasing to a small degree is the ethanol sector, driven by the ethanol mandate that came into effect in Queensland on January 1. The big question here will be how heavily it is policed and enforced in Queensland, as there has been a similar mandate in NSW for many years, but the demand falls well short of the mandate expectations.

The wash up is production will most likely be down 25-30 per cent, with domestic demand down by a similar proportion. That will still leave a large exportable surplus, which needs to move into an export market that is spoilt for choice when it comes to feed grains.

So how are we priced from an export viewpoint? How do we engage the export consumer? In United States dollar (USD) terms Australian sorghum is expensive, even with the devaluation of the Australian dollar (AUD) relative to the USD in the past month.

Save for minor parcels of container business into the alcohol sector, China is simply not engaging the Australian market at these prices. The domestic price premium over sorghum out of the US Gulf says that Australian sorghum is just too expensive.

Based on current production estimates two scenarios have to play out here. Either global feed grain values have to increase (unlikely due to aforementioned surpluses) or the price of Australian sorghum must decrease to buy meaningful export demand.

Of course, it could turn wet and plantings are ultimately higher than forecast. Or it could turn dry and the crop suffers quality issues and reduced yields. That said, as we stand today, the new crop domestic price should be viewed as attractive and anybody with a degree of production certainty should consider taking some price risk off the table.

Nidera Australia, Peter McMeekin

Nidera Australia, Peter McMeekin




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