No price is ever too high for a bull

Matthew Pattison, March 6, 2018

QUEENSLAND, hey…beautiful one day, pouring rain the next.  As if just to rub it in, Mother Nature follows her terribly dry January with a damp February and then a seriously wet start to March.  She waits for the crop to struggle, shrivel and fall over before she sends in the rain.

Now I’m not saying this rain isn’t welcome in many ways, however parts of far western Queensland haven’t seen rain like this in a generation.

This is the one we’ve been waiting for too.  But, for those among us who either grow or trade the red stuff, this is just another punch to the midriff, thrown in with the intention to suck the wind right out of our lungs.

This one comes as the Chinese return from their recent New Year celebrations; with their buying boots on.

Entering the market last week, and as expected, our number one customer scooped up offers like seagulls on hot chips and the market shot up on the back of it.

Rain makes grain

And then there’s this rain… Now we must wait to see what the quality looks like on the other side of this rain to see if we order another serve and head back to the beach.

Hopefully the rains deliver the right amount where we want it and not too much where we don’t.

Either way, we are getting a very nice foundation laid for winter crop plantings.

Prices up

Week on week, values were easily $10/tonne higher and although the buyers started to shy away at these higher values, they were certainly there to go again if we looked like coming back to the values that started the week.

This is certainly a welcome development.  Back in January, we were very sceptical that the Chinese would pay our prices.

US origin sorghum was much cheaper, and we looked like we needed to get lower to compete.

But then, the chairman of the “Australian Sorghum Lobby,” Donald Trump, slapped a tax on Chinese solar panels and washing machines, launching a well-timed trade barney, and the Chinese throw up the barricades to US sorghum quicker than you can say “Get me Australia on the phone”.

Our market is now A$40/t higher than it was a month ago, the Chinese are buying, the crop got a reprieve from Mother Nature and we were all booking plane tickets to China.

Bullish fundamentals

If we can ignore the Indian chickpea levies for just a moment, the wheat market is all bulls.

There’re a few fundamental factors I would like to mention here before I close;

  • Argentinian summer crops are on fire,
  • the U.S plains are dry,
  • Canada isn’t ideal.
  • Europe and the Black Sea got a shot of cold weather,
  • India is far from ideal and
  • markets everywhere are firm to stronger.
  • Funds are buying,
  • the dollar is three cents lower than a month ago,
  • Black Sea wheat is up US$10/t in a month…

I could go on….

Bullish markets like these remind me to recite the three major rules of grower marketing.

1) You grow it to sell for cash and,

2) you sell while the selling is good and,

3) be kind to your sorghum trader, he’s had a tough month or two.


Source: This article was written by Toowoomba-based, COFCO International Australia, sorghum trader Matthew Pattison



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