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Support for feed grain

26 Nov, 2012 03:00 AM
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The market is sending signals that it wants every tonne of grain it can get.

NORTHERN Australian grain producers are turning to sorghum in a bid to take advantage of high feed grain values.

PentAg Nigera feed grain manager Matthew Pattison said farmers were still busily planting sorghum, in spite of the fact it is later than optimum for sowing and relatively low moisture profiles.

“The market is sending signals that it wants every tonne of grain it can get. We’ve got sorghum prices at around $250/t delivered Brisbane, and historically it doesn’t stay at these levels for too long,” Mr Pattison said.

“The encouragement is there for farmers to plant those more marginal areas, and its happening right across the globe – there are big plants in places like South America, following the price spike this year.”

He said Australia’s summer croppers saw sorghum as the best bet this season, preferring it over cotton in many cases.

“Cotton prices have come back in the past 12 months, so now we are seeing farmers switch over to sorghum this year where they can.”

Mr Pattison said the high prices meant there was still a reasonable summer crop plant, in spite of the fact conditions have been less than ideal.

“It’s a very late plant, and we’re going to see a late harvest, but the rain in the past month has seen more plantings.”

Overall, he said he still felt the sorghum plant would be down as much as 15pc due to the seasonal conditions, but he said in areas like the Darling Downs, where there had been more rain, there would be a higher plant than last year.

“The late start will detract from yield potential, but I think farmers are prepared to take that risk given the tight balance sheet.”

Another quirk of the year is that a potential late summer harvest has led to old crop sorghum trading at $15/t above new crop values, an inverse of the normal situation.

In terms of winter crop and feed grain, GrainAssist regional manager Ash Munro, based in Mildura, Victoria, said the barley harvest was coming in slightly better than expected in the northern Mallee.

He said, with no weather events downgrading wheat, domestic end users would be looking for cheaper barley to put into their ration.

At present, F1 barley is trading at around a $50/t discount to ASW wheat in the Mallee.

“End users have indicated they will be using more barley over the next six to 12 months,” he said.

Mr Pattison said feed barley would continue to trade off ASW values.

“In terms of function to price, feed barley is still cheap in comparison to the ASW wheat end-users would have to buy if they want feed wheat.”

Internationally, Mr Pattison said corn values, the major determinant on world feed grain prices, continued to hold on the Chicago Board of Trade (CBOT), while physical cash prices were rising across the world.

“We’ve seen cash prices close in $20-30/t on futures in recent weeks, US futures prices are still too dear for much trade to be done, but the spread is tightening up.”

He said the next month would be critical in terms of a lead for corn prices, as more is known about the condition of the large South American plant.

AWB’s Richard Williams said he expected the lower production of cereals in Australia to have an impact on feed grain values, along with the ongoing tightness of the international balance sheet.

“We expect strong feed barley demand, both domestically and internationally, at least through the first half of 2013.”

He agreed with Mr Munro, saying the wheat / barley spread would entice domestic customers to use barley where possible.

Mr Munro said the quality of feed barley in the Mallee was excellent, with only a very small percentage of F2 or worse barley, which he said was caused by isolated pockets of frost damage.

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