Lack of supply key driver in upward swing

Lack of supply key driver in upward swing Sorghum stocks dictate price


Cropping
Sorghum prices are on the rise with supply at half of what it was last year. While demand will fuel further rises, support is not expected from lotfeeders who shy away from the grain at these prices.

Sorghum prices are on the rise with supply at half of what it was last year. While demand will fuel further rises, support is not expected from lotfeeders who shy away from the grain at these prices.

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Low supply and market demand have conspired in favour of sorghum price but next summer's crop could swing it both ways says industry.

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A case of supply versus demand will affect sorghum prices going into the summer season according to Rabobank senior grains and oilseeds analyst Cheryl Kalisch Gordon.

Poor production last summer under hot and dry conditions resulted in supply plunging to 50 per cent on the previous summer.

“As a result stocks are 30pc of forecast levels following a lower winter supply,” said Mrs Gordon who noted patchy conditions in northern NSW and southern Queensland could conspire to further reduce consistent supply.

The export market, meanwhile, would not be an important player in Australian domestic futures. Production in the US was “quite down”, however there remained a massive corn stockpile in China and a greatly reduced market interest from that country.

Sorghum used as chicken and pig feed would help drive demand here at home, but producers shouldn’t expect much of a bite from the intensive beef industry, despite a record number on grain.

Australian Lot Feeders Association president Tess Herbert said from her own experience in the state’s south, sorghum did not figure in ration recipes in preference to tempered wheat and barley which required less preparation compared to steam flaked sorghum. Mrs Herbert said grain prices generally were “much cheaper in the south” compared to with what lotfeeders in northern NSW and southern Queensland were currently experiencing.

Jason Shearer-Smith, managing director of Smithfield feedlots at Proston and Goondiwindi said sorghum hadn’t featured in his company’s rations for the past three to four years, although it could come back into rations from March or April next year. Mr Shearer-Smith predicted a price come-back should the summer crop be a success. “Right now we are dealing with low supplies of the old crop which are not very good,” he said.

While the Proston facility had steam flaking capability – about the only way lot feeders will use sorghum – its Goondiwindi facility did not, and relied on wheat and barley in the mix.

Meanwhile, dryland production on volcanic soil at Oakbank, via Inverell was facing good prospects this coming season. Broadacre croppers Brad Schwark and son Kyeron said they were optimistic considering they already had a full moisture profile in their long fallow paddocks. 

The bright outlook comes as a result of good conditions in the Inverell district during the past 14 months.

Local Lands Services advisor Glen Uebergang, Inverell, said there was good soil moisture east of Inverell, but not so much to the west. “There may be soil moisture at depth but after the past two months there’s nothing on the surface,” he said. “We need rain in the next six weeks to prepare for summer planting.” In saying that, with cotton prices down it looked likely that summer sorghum will be prominent in places that have moisture.

The story Lack of supply key driver in upward swing first appeared on The Land.

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