Australia sorghum forecast cut stirs China-US trade spat fallout

Australia's anticipated sorghum production has been cut by more than a quarter on weather-based planting delays, giving the market food for thought as a trade spat over sorghum exports intensifies between China and the US.

Unfavourable planting conditions saw a 26% decrease in sorghum production, the biggest monthly adjustment in ABARES’ crop production report released Tuesday, with production now forecast at 1.47 million mt.

While anticipated production remains 44% above the 2016/17 season, it is below the five-year average of 1.79 million mt.

The move will put pressure on the sorghum market, which has recently been stirred to life in the wake of a trade spat between China and the US over alleged subsidies that are encouraging sorghum imports and preventing China using up its mountains of corn stocks.

Market sources say Chinese buying interest for Australian sorghum has increased in the days following the investigation's announcement.

Adjusted

Other notable amendments to ABARES’ forecasts included a 12% increase on the last report’s barley figure to 8.93 million mt, although this remains significantly below 2016/17’s 13.41 million mt.

A 29% month-on-month increase was also seen for canola which is now up to 3.67 million mt – but down 15% compared to last year’s crop.

Wheat production has been increased 944,000 mt from December’s report to 21.24 million mt, largely in line with the USDA’s most recent production forecast.

While the forecast increased 5% from the previous report, there is still a massive 13.1 million mt fall in production that will put pressure on wheat exporters who were able to export 22.6 million mt last year.

Mind the gap

Wheat also saw a 640,000 mt reduction in the 2016/17 wheat production figure to 34.37 million mt, a move which partially addressed the difference between Australia’s ministries of statistics and agriculture.

However, a 4 million mt remains between the two estimates, with ABARES also over 4 million mt above the USDA’s most recent production estimate.

Addressing the gulf between the figures, ABARES explained it had met with ABS, adding the statistics ministry’s “estimates are preliminary and subject to review before the ABS releases final estimates later this year.”

“In past years, final crop estimates released by the ABS have often been higher than its preliminary estimates.”