December 14, 2007

Australia's grain needs hinge on sorghum crop

Australia is still expected to avoid the need for grain exports into early 2008 after two drought-ravaged seasons in a row, but much depends on the outcome of the sorghum crop, German-based analysts at F.O. Licht in a report on Thursday (December 13, 2007).

"Despite the current shortfall in Eastern Australia's winter grain supplies, it is not yet clear for several reasons if Australia will have to acquire substantial amounts of grains," F.O. Licht said.

"Should the eagerly awaited sorghum crop turn out to be lower-than-expected and remaining national (grain) inventories further dwindle rapidly imports may still appear later in the next year," F.O. Licht added.

Recently the Australian Bureau of Agricultural & Resource Economics, or Abare, forecast 2008 sorghum output at 2.0 million tonnes. This is more than double the previous crop of 952,000 tonnes.

F.O. Licht said a year ago Australia's grain industry had 13.2 million tonnes of cereal supplies in storage to fall back on, but as of October those stocks had fallen to 2.5 million tonnes.

The report added that some pressure has been eased as supplies are made available from the less-drought-hit regions of South Australia and Western Australia. Those regions traditionally produce for the export market. In addition a sizable drop in cattle on feedlots is also expected to trim demand.

In early November Australia approved 12 types of feed grains for import to help meet industry needs in eastern Australia.

F.O. Licht said the last time Australia purchased grain on the international markets was in 2003, with 476,000 tonnes of corn and wheat from the UK, Canada and US

The report added that the deregulation of Australia's wheat exports in bags and containers and a more liberal bulk wheat export market suggests "a bright futures for the grain sector" especially with growing demand out of East Asia.