No pricing silver lining for sorghum producers

Australian sorghum producers have not only had a markedly below average season production-wise but demand is at its lowest ebb for many years.GENERALLY, the consolation for growers in years impacted by adverse weather conditions is that what little product they have attracts a significant drought premium.
Nanjing Night Net

However, that will not be the case for sorghum growers in northern Australia, forced to market the smallest Australian sorghum crop in 20 years against a glut of feed grain across the globe.

There is currently a small premium in place for Sorghum 1 over feed wheat and barley in Queensland.

However Dan Basse, president of Chicago-based agricultural research business AgResource, said strong competition globally would keep a lid on upside.

“The sorghum story is fairly grim, a change in Chinese agricultural policy has meant they have gone from being big importers of the grain to big producers in just two years,” Mr Basse said during a recent visit to Australia as a guest of Rabobank.

“It means that at present, sorghum is not a terribly profitable crop, not only in Australia, but also in the US.”

In its most recent estimates, the US Department of Agriculture (USDA) backed up Mr Basse’s comments, by raising its forecast for Chinese sorghum production to jump to 3.8mt, the highest figure for nearly 20 years.

Nidera Australia origination manager Peter McMeekin said Australian sorghum producers were faced with low demand for their product.

“The high sorghum price relative to wheat and barley has driven domestic sorghum demand to its lowest level in many years,” he said.

“There is certainly enough grain in Australia this season to satisfy domestic demand, regardless of the size of the sorghum crop.”

He said many feedlots in southern Queensland had switched to white grain and were not planning to reintroduce sorghum into their rations, leaving the poultry and biofuel sectors as the major buyers of sorghum domestically.

And the story is not much better on the export front.

Mr McMeekin said there was some interest from China for sorghum for use in alcohol manufacturing, but added this would only be a niche opportunity.

“We will probably see containers exported but it will not be on a scale requiring bulk shipments,” he said.

“It is not priced into use in the Chinese feedlots.”

Brendan Taylor, sorghum producer at Warra, north-west of Dalby, said he believed the relative strength to now of Sorghum 1 prices must be due to some amount of Chinese demand and the downgrading of this year’s crop.

“Perhaps the market didn’t realise how small this year’s crop was and also how much of what was harvested would be downgraded to Sorghum 2 quality.”

This story Administrator ready to work first appeared on Nanjing Night Net.

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