Last week’s forecasts for general rain across all sorghum-growing areas in Queensland and New South Wales has softened the market for the summer cereal by around $10 per tonne in the past week.
Horizon Commodities manager Aaron Jones, Dalby, Qld, said wheat and sorghum for delivery to Darling Downs end-users was trading in reasonable volume ahead of the rain, which has been forecast to deliver up to 100 millimetres to NSW and Queensland cropping country.
“The forecast is now in the final hour, and sorghum is trading at around $350 per tonne delivered Downs for March-April, which is down from last week,” Mr Jones said.
ASW-type wheat normally trades at a premium of around $50/t to sorghum, but the shortness of local supply has blown out the spread to $60-$90/t.
“It’s all over the shop this season, and now that wheat in WA has found some support from the world price, wheat in Queensland has gotten dearer, and the spread is back up in the mid $80s.”
Wheat delivered Darling Downs for January forward has been trading at $438-$439/t plus carry.
“At these wider spreads, sorghum is looking more attractive.”
Sorghum needs rain
Mr Jones said the condition of crops on the Downs was mixed, and they would all benefit from a drink.
“Some of the sorghum has been knocked around by wind, and without this rain, a lot of crops will be in trouble.”
While barley has been trading at a $35/t discount to wheat, and some feedlots were using it, demand for the grain has been limited.
Some end-users are hanging hopes on early planted sorghum hitting the market in February.
AgVantage Commodities managing director Steve Dalton, Narrabri, NSW, said the market had been quiet as growers waited for sorghum’s prospects to consolidate.
“Wheat and barley are steady if not firmer, and APH has been trading at $450/t delivered Narrabri, and $5/t less for H2, whereas barley is still around $400/t on farm in the Moree, Narrabri and Goondiwindi districts,” Mr Dalton said.
“In sorghum, there are bits and pieces of grower selling, but I’m not selling volume sellers.
“Growers have seen $350/t on-farm come and go, and there’s not too much confidence in yields unless we get rain this week.
“The crops are hanging out for it, and if we don’t get it, crops will continue to deteriorate.”
Mr Jones and Mr Dalton said early planted crops were looking better than later ones.
“There’s such a variance in the crops, depending on when they were planted, and I don’t think there’s as much sorghum in the ground as the market thinks.
“The potential for a later plant is there, but the window will close after next week, and people are cautious, with the Bureau of Meteorology forecasting a hot and dry summer.”
Mr Dalton said feedlots did not look like switching their rations from a wheat to a sorghum base until the sorghum crop’s prospects consolidated.
Quiet in the south
Growers in Victoria, South Australia, and southern NSW have been minimal sellers as they continue to concentrate on harvest.
Since Monday, the value of the ASX January eastern wheat contract has risen from $432/t to $444/t, indicating bid-side pressure from those trying to close out their January futures positions with little hope of buying cheaper cash deliverable wheat in the south to apply against them.
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