Grains Research and Development

Date: 02.09.2013

Strong future predicted for summer grains

Author: Nicole Baxter

Image of a man standing at a lectern

David Parker, vice-president of US
commodity service company Nidera.

Photo of Dr Mike Bell, principal research fellow at the University of Queenland Alliance for Agriculture and Food Innovation

Dr Mike Bell, principal research fellow at
the University of Queensland’s
Queensland Alliance for Agriculture and
Food Innovation.

Photo of Graydon Chong

Rabobank senior grain and oilseeds
analyst Graydon Chong.

PHOTOS: Nicole Baxter

Strong demand for sorghum earlier this year meant there was plenty of interest in the latest research outcomes on offer at the 2013 Australian Summer Grains Conference, held recently on Queensland’s Gold Coast.

Sorghum, in the past mainly grown as a feed grain, is now in demand for human consumption. In June, prices reached $340 per tonne, backed by strong demand from China for alcohol production.

Addressing the conference, retiring GRDC chair Keith Perrett said the future looked bright for the summer grains industry.

US-based David Parker, vice-president of commodity service company Nidera, agreed, saying drought in the US and increased demand from China had underpinned sorghum prices in the first half of the year.

According to Mr Parker, China was buying Australian sorghum to make Moutai, a sorghum-based liquor that is up to 53 per cent alcohol. But he said it was unclear what had sparked the 20 per cent increase in demand and whether it would to continue.

In China, where the average annual income is now more than A$5000, Graydon Chong, senior grains and oilseeds analyst at Rabobank, said consumers were demanding higher-calorie fried foods, which was also lifting demand for oilseeds.

He said growth in demand for animal protein from Asia (mainly China and Indonesia) was driving domestic demand in grains and oilseeds stocks.

“It’s important to target specifically which markets we’re after and what commodities they’re going to be demanding, as demand is always changing,” he said. “We need to build relationships to take advantage of niche opportunities when they occur.”

Mr Chong believed the sharp rise in demand for high-quality sorghum from Chinese traders was an example of where Australia would see gains going forward.

“Australia is renowned for its high-quality food and we need to maintain that edge,” he said.

For many northern growers, summer crops are the most profitable part of their rotation, returning an estimated value over five years of $645 million annually from 2.5 million tonnes of grain on average each year.

Aside from being a cash crop, summer grains offer rotational benefits including the use of alternative pesticides to control weeds and disease and a boost to soil nitrogen.

Dr Mike Bell, principal research fellow at the University of Queensland’s Queensland Alliance for Agriculture and Food Innovation, told the conference he believed a key threat for the industry was the loss of native soil fertility.

“The bigger the crops we produce, the bigger the nutrient export, the more we rundown our native fertility resources, the more we need to rely on costly fertilisers,” he said.

From a cost perspective, Dr Bell said this challenge would test the resilience of many cropping systems. However, he saw increased frequency of legumes as an opportunity.

“Legumes put back nitrogen into our systems and allow some of the investment we’re making in nitrogen fertiliser to be diverted to other nutrients,” he said. “But I’m not sure we’ve got the right species to do that, so we need to keep looking to find summer legumes that will do that job.”

More information:

Graydon Chong
02 8115 4091,
graydon.chong@rabobank.com

Dr Mike Bell
07 4160 0730,
m.bell4@uq.edu.au

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