PRINTABLE VERSION   EMAIL TO A FRIEND   RSS FEEDS 14:14 UK, 29th Jan 2014, by Agrimoney.com
Brewing storm may hold key to Aussie grain prices

The course of a tropical cyclone which has developed off the eastern Australian coast may prove key to the country's grain fortunes, in watering sorghum seedlings, and giving a "shot of confidence" in prospects for wheat plantings.

While unexpected rains last week, in boosting prospects for crops which have suffered the driest January for five years in parts of New South Wales and Queensland, sent Australian grain prices tumbling temporarily last week, values have started to recover thanks to a dearth of follow-up moisture.

May sorghum futures, having lost Aus$20 a tonne in Sydney in three sessions last week, have since recovered half of that, to close at Aus$336.00 a tonne on Wednesday.

"Let's face it an inch of rain following weeks of stinking hot weather and strong winds does not make a whole lot of difference to production prospects," said Pentag Nidera, the Queensland-based grains broker.

The dearth of rain has meant that, in central Queensland, just 20% of sorghum is planted, according to the broker, with the sowing window closing.

'More and more precarious'

However, a storm, currently named Tropical Cyclone 11P, forming off the north east cost of Queensland could offer crops more substantial refreshment, if bringing flooding risks too.

The storm is expected to make landfall on Thursday night, bringing rainfall which locally could hit 10 inches.

"What has potential to generate more of a difference, particularly in central Queensland, is the tropical depression now brewing in the Coral Sea," Pentag Nidera said.

Current sorghum prices, which it quoted at Aus$300 a tonne in the cash market, "will buy plenty more acres if the rain does come".

Furthermore, "any drought-breaking falls further south resulting from the potential monsoonal influence would provide a shot of confidence over potential winter crop plantings which are looking more and more precarious as each week passes without rain".

In fact, the extent of rainfall, "or lack of it, from here on in in northern New South Wales and southern Queensland will have more an influence on new crop wheat and barley markets than either old crop or sorghum".

El Nino threat

In fact, farmers still have some three months before worries will rise over wheat planting delays, although canola is typically planted earlier.

But the comments come amid rising worries about the threat of an El Nino later in the year, likely to test water reserves in Australia's east.

Official meteorologists in both Australia and the US have highlighted growing signals of a nascent El Nino, linked to dryness in eastern Australian, although they have also stressed that the formation of this weather pattern is by no means certain.

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