Monday, January 14, 2013

Sorghum Desperate for Rain

Main production regions have finished harvest for a couple of weeks now, with only the later maturing regions of the Victoria Western District and far south east of SA would have grain still on the stalk.  Apart from WA and to an extent SA were wheat warehouse receivals exceeded expectations, much of the east coast receivals have been below par.

Is it on farm? Probably not, with cash prices and basis high throughout harvest, the % stored on farm you would assume to be lower than usual.  Is the canola area bigger and less wheat planted than anticipated? Prospects in VIC/NSW continue to get bigger at a national crop estimated at  3.4mmt. This compares to only 3.1mmt from AOF, which we believe continue to underestimate the swing last year. 

With the current prices, sorghum growers still took the risk of sowing through late December and taking a yield penalty for future disease issues and flowering at the hottest time of the year. CQ remains dry with an 80 – 100mm deficit through Nov/Dec, January so far also remains parched. Although a few growers have kick started their sowing program, the majority are still waiting for rain. In the Downs, bit of mixed bag with the early October planted sorghum looking good (5t/ha prospects), while the later planted crop will be playing catch up.

Prospects are looking especially bleak in the Liverpool Plains, with many comments from growers that they haven’t seen it so dry for this time of year. The majority was sown dry before the late rains in December, but how much was planted is the cause of deliberation. It ranges between 15 – 30% of original intended sown area. Further west towards Moree, conditions are not as poor with the earlier planted crop flowering. Although planted area is down, how much is again a cause of debate.

Even though East Coast production is estimated at nearly 4mmt less then last year, Graincorp has taken 9.5mmt so far this harvest. Surprisingly this is only 1mmt less than last year’s bumper crop. Possibly highlighting more was sold for cash at harvest. With cash and basis high throughout harvest combined with overall good quality the % stored on farm you’ll assume to be lower than usual. Quality is split between ASW, APW and H2 with very little wheat downgraded to feed grades. Low protein has also impacted on barley, with F1 dominating receivals.  Alluding to the bumper chickpea crop this year, 200kt has already been exported out of QLD ports in Nov (a record). This compares to last year when only 42kt was exported.  Potentially a record canola crop is tipped, with most Graincorp storages reporting their segregations are full.

How wheat exports play out for 2013 will be interesting. On the East coast there is already a lot of expensive logistics already booked at 9.1mmt on the stem. If you throw in the sorghum crop coming in much lower, livestock feed demand increasing on account of pastures drying out, things could get tighter sooner rather than later. 

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