Australian sorghum exports face a squeeze this year as hot and dry weather shrivels tonnage's in a crop now being harvested. With up to 20 percent of the sorghum harvest complete in south Queensland State and less advanced elsewhere, lack of rain during the growing season from December to February has produced disappointing results for the feed grain.
Australia exports up to 500,000 tonnes of sorghum in a good year, most of it to Japan as feed for its domestic cattle industry. "I don't know that we'll see any exports at this stage," Andrew Walker, grains broker with Fox Commodities, told Reuters.
Australian domestic sorghum demand is around 1.5 million tonnes a year. Exports fluctuate between minor amounts and up to 500,000 tonnes, with almost all typically going to Japan. Exports totalled about 300,000 tonnes in 2004/05.
Some small business would still be done with Pacific islands and New Zealand. But big volume exports to Japan were looking "pretty unlikely" at this stage, Walker said. Australia is one of the largest sorghum exporters in the world, after the United States and just ahead of Argentina.
Australia's main small markets for sorghum are Taiwan, Papua New Guinea, the United Arab Emirates and New Zealand. Private group Australian Crop Forecasters this week cut its forecast of the current sorghum crop by a further 9 percent to 1.77 million tonnes.
The final harvest could be 200,000 tonnes less than that, Walker said. This will be down from around 2.1 million tonnes last season and lower than a five-year average of almost 2 million tonnes. Eastern grains handler and trader GrainCorp Ltd this week said its receipts of sorghum amounted to over 250,000 tonnes.
The current sorghum harvest is also producing a "mixed bag" in quality terms, some commentators in Australia said. Walker said harvested grain was often of poor quality and improved as the harvest went on.
The tight domestic market was showing through in solid domestic prices of around A$170 ($125) a tonne in Brisbane and Newcastle. In central Queensland, which traditionally trades at a discount, prices were at a premium this year, around A$180.
"It's just too strong for the export market," Walker said. The sorghum market was "pretty well in equilibrium", with farmers attempting to force prices higher by holding back supplies where possible.
Walker did not see an impact on the coming wheat crop from the scandal engulfing monopoly wheat exporter AWB over alleged kickbacks to Iraq's Saddam Hussein. "I'd be very surprised if there was any impact at all," he said.
Others in the industry have said uncertainty created by an Australian government-appointed inquiry into AWB could affect wheat plantings, and planting rainfall patterns would be a bigger influence.
Meanwhile, Wheat Australia is still negotiating with Iraq for the sale of 350,000 tonnes of wheat, to be drawn from AWB's export pool. The Iraqi Grain Board has suspended business with AWB while the inquiry investigates the alleged kickbacks.
Mario Falchoni, a spokesman for GrainCorp, a one-third shareholder of Wheat Australia, said agreement for a sale to Iraq was not expected before next week.
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