GOOD December rainfalls have set the foundations for above-average yields for summer crops across Queensland.
Southern Queensland growers are four to six weeks away from the start of sorghum harvest. Heads are still green but will start to turn shortly.
Sorghum crops benefited from the heavy December rainfall across southern Queensland which built up soil moisture reserves.
Crops will benefit from another good rainfall through January despite the good soil moisture levels.
Central Queensland sorghum planting is under way and will continue through January. Heavy December rainfall has allowed for a timely planting.
Growers are taking a hard look at their summer crop alternatives, particularly with the recent sharp slide in wheat prices. Increased areas of sunflowers and mung beans are expected, but sorghum will capture the bulk of the summer crop area.
ABARES forecasts that the sorghum area will be steady but yields will be sharply higher. They are forecasting Queensland sorghum production at 1.7 million tonnes, up from 1.25mt last year.
Global grain prices bounced sharply in the last two weeks of December on drought conditions in southern Brazil and Argentina before suffering a setback last week.
The hot, dry weather that is gripping much of Argentina is threatening their corn and soybean crops, but this has provided some welcome support for world wheat prices.
Much of Argentina recorded less than half of the normal rainfall during December, which has seen crops go backwards.
Corn crops are suffering, with the bulk of the crop now in the critical pollination phase.
Private forecasters have lopped their production estimates and the USDA is expected to follow when it releases its January World Agricultural Supply and Demand Estimates later this week.
Soybean production is considered less vulnerable than corn because crops are still some weeks away from flowering, but the dry weather is still providing support to canola prices.
Dry weather is starting to be a problem in Canada, which is experiencing its driest winter in five years. Some areas are reporting less than half of their normal precipitation in the past couple of months, which has growers talking about the lack of snow cover. Snow cover provides moisture reserves for the spring crops which account for the bulk of Canada's spring wheat and canola production.
US corn prices have jumped by $30/t since mid-December to $279 FOB US Gulf, gaining another $9/t last week. South American corn prices have jumped with the crop concerns, but are still priced at a sizable discount to US corn.
Wheat prices have also rallied on the back of the concerns of the South American summer crop output. Hard Red Winter wheat gained $30/t in the last two weeks of December but fell sharply last week as US export sales continue to lag.
Last week US Hard Red Winter wheat prices fell by $17 to $288/t FOB US Gulf. High-protein US wheat suffered even larger losses with 13.5 protein spring wheat tumbling by $30/t.
However, lower quality wheat grades generally backed the bearish trend, with Black Sea wheat ending up $15 to $255/t FOB on the back of strong demand for the cheaper wheat grades.
Export demand for the lower quality wheat grades into South East Asia remains strong, with shipping stem data showing large January exports.
Australian ASW and feed wheat grades are set to capture a sizable share of Asian feed grain demand.
Many buyers are opting for wheat over corn because of the price advantage with Australian wheat ? a popular choice because of its freight advantage into Asia over Black Sea and Argentine wheat.
AWB raised its 2011-12 pool estimates last week following the recent rally in world grain prices.
Pools increased by up to $10/t, with the largest increases in the lower quality grades. Last week APH2 bids jumped by $14 to $314 Brisbane, as exporters move to cover nearby shipments.
Feed grain bids were also stronger as end users looked to cover some demand in case domestic prices continue to move higher.
Stockfeed wheat was up by $3 to $196 delivered Downs, feed barley jumped by $13 to $198 delivered.
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