Global grain markets are becoming wary of the escalating trade tensions between the world’s two largest economies.
Early last week, China announced a 179 per cent tariff on US sorghum, effectively halting imports in their tracks.
China has emerged has the dominant market for US sorghum in recent years, accounting for 4.3 million tonnes of shipments in 2017.
Prices for US sorghum have tumbled in recent weeks after China announced an anti-dumping inquiry in February.
The move is just one part of the escalation in trade tensions between the world’s two largest economies where agricultural commodities have become the latest target.
China’s move to stop US sorghum imports is supportive for alternative feed grains such as Australian sorghum and barley.
Queensland sorghum bids moved sharply higher on the news of that China had effectively banned US sorghum imports.
Sorghum prices finished last week $12-15 a tonne higher at $360 delivered Brisbane.
Earlier in the week, prices briefly reached $365 Brisbane before buying interest cooled.
Central Queensland sorghum prices have now rallied by $75 a tonne in the past 12 weeks.
Traders are reporting at a significant volume of Australian sorghum has already been committed to China in recent months as buyers move to alternative supplies.
It is not clear if last week’s kick in sorghum prices was a result of additional sales or nervous trade shorts stepping up efforts to secure grain.
China’s barley imports surged in March to 860,000 tonnes, up 22 per cent on a year ago and sharply higher than the average monthly import pace of less than 600,000 tonnes over the prior six months.
Demand for barley in China has surged since the government announced the anti-dumping inquiry into US sorghum as feed grain buyers looked for alternative feeds, according to local analysts.
Victorian farmers are preparing to boost barley plantings on the back of the strong global price outlook.
Traders believe that barley plantings through Victorian and southern NSW are likely to jump by more than 10 per cent at the expense of reduced pulse and canola.
The most immediate concern is the relentless dry weather, with typical average season break date of Anzac Day now behind us.
Victorian grain prices continue to strengthen as the dry start to the season persists.
Buyers are already staring at $300 plus for stockfeed wheat into Melbourne for the remainder of the season.
APW bids were $5 higher last week at $300 delivered Melbourne while feed barley was unchanged at $288 Melbourne.
Local grain prices are detaching themselves from global influences as local supplies become scarcer.
Markets through southern NSW and Victoria also remain well supported as farmers wait for rain before contemplating additional sales.
US grain markets were softer last week on improving weather and growing concerns over the escalating trade dispute with China on agricultural exports.
CBOT wheat futures declined by 2 per cent on forecast rain for the parched HRW wheat crop and warmer forecasts for the spring wheat areas which would allow a general start to plantings.
