CHINA'S expanding population and economy is continuing to boost sales of their traditional clear spirit baijiu, which is good news for grain growers who provide the key ingredient, sorghum.
The country's total sorghum for liquor demand has risen to 1.5m tonnes, helping make baijiu the world's most consumed alcoholic drink according to the International Wine and Spirit Research Group.
Graincorp grain merchant Brad Taylor said China imported around 750,000 tonnes of Australian sorghum last year, which saw plenty of support to Australia's domestic values throughout the back end of the 2012/13 sorghum season, but crippling drought in eastern Australia has dampened this year's demand.
"Prolonged drought in the main cropping regions of central Queensland, southeast Queensland and northern NSW this summer means the US sorghum production outlook is in a better situation than that of Australia, allowing the US to sell more sorghum to China at very competitive rates," he said.
Mr Taylor said while Australian feed demand is likely to receive priority, potential remains for exports of sorghum into China depending on market prices.
"While China has been focusing their buying appetite on the US so far for the 2014 season, Australia is in a potential position to again fill some of China's sorghum demand, dependent on weather and local values.
"Australian sorghum has particular quality parameters that are desirable for baijiu production, which is why China is watching our local production and values closely."
Sorghum production estimates from ABARES and Australian Crop Forecasters for eastern Australia range between 1.2-1.3 million tonnes.
Mr Taylor said the Chinese import demand is dictated by whether CNF (Cost and Freight) Australian sorghum lands above or below their domestic substitute.
"The US' current price idea for the top end Chinese buyer is about $40 to $60 below our current prices in Australia on a delivered container basis.
"Australian sorghum landed via containers based on our current domestic values equates to a $US365, while US is around $US300 and interior domestic Chinese sorghum is US$355," he said.
Pacific Seeds grain sorghum manager Andrew Short said the shift in people's thinking on the ancient grain has helped the market.
"People are starting to view sorghum as fit for human consumption in food and drink due to its high nutritional content and suitability for drink processing, rather than just as a feed grain."
He said the fact that Chinese customers are still showing interest in Australian sorghum despite high prices shows how valued the home-grown product is.
"As with any product on the market there are various tiers of quality and the Chinese look to our sorghum with high quality parameters to produce their high-end beverages," he said.
"It's one bright light in what has been a below average year for sorghum producers.