Farm officials flagged the extent of the threat to Australia's
sorghum crop, which have kept prices unexpectedly high, even as Cargill
cautioned that values of the country's wheat may be too high.
Sorghum futures for May closed at Aus$276.00 a tonne in Sydney
on Thursday - showing strength beyond that expected by some analysts, in remaining
only Aus$12.00 below a December top which represented the highest price since
Luke Mathews at Commonwealth Bank of Australia said: "Despite
some modest softening, we have been surprised at the relative resilience in
sorghum prices given last week's beneficial rainfall," which appeared to have
improved prospects for a crop tested by early-season dryness.
However, the extent to which sorghum harvest prospects have
already been damaged by highlighted by farm officials in New South Wales, who
slashed by 35% to 101,070 hectares their estimate for the state's sowings of
the grain, with the planting window now firmly closed.
New South Wales is, with Queensland, one of Australia's two
The downgrades was "due to the very dry conditions and a
lack of planting opportunities from October through to early January", the
officials said in a report.
And even much of what had been seeded remained in poor
"The unseasonal high temperatures have quickly drained what
stored soil moisture reserves growers had, with the bulk of the dryland crop
across New South Wales under moisture stress for much of the December and
Sorghum crops were "generally patchy, and yield potential is
below average because of the dry summer with high temperatures affecting
pollination in many crops".
The report stopped short of commenting on prospects for the
state's important wheat crop, for which soil dryness has provoked some concerns
over seedings too, but which remains some three months away from planting.
Indeed, separately AWB, Cargill's Australian grain handling
business, cautioned farmers and investors against pushing wheat prices too high
for now, when the market was more interested in weather affecting crops in northern
hemisphere producers such as Europe, Russia and the US.
"Australian domestic wheat prices are very strong at
present, to the point where some international customers are concerned that
Australian wheat is becoming uncompetitive on paper," AWB spokesman Richard
"We have witnessed
discounting to the export consumers, particularly in Western Australia, to
"Our view is that the current high Australian wheat prices,
relative to competing origins, are unlikely to be maintained, and we are
attempting to take advantage of today's high prices where possible."