WASHINGTON, March 4, 2015 – This could be a banner year for sorghum. Government and industry reports project a big jump in acreage in 2015, in response to strong export demand.
According to USDA figures released at the agency’s recent Agricultural Outlook Forum, farmers will plant 7.5 million acres with sorghum this year, a 5.1 percent increase over 2014. Still, sorghum remains the fifth most planted crop in the U.S., accounting for just 2.9 percent of the country’s projected planted acres.
While sorghum’s acreage is small in the grand scheme of U.S. crop production, export demand drives potential profitability for the cereal grain, most often used as livestock feed. China has been a major player – importing 168 million bushels of sorghum last year – and accounting for about 90 percent of U.S. exports – according to the National Sorghum Producers. NSP said exports represented about 52 percent of the sorghum market in 2014. Alvaro Cordero with the U.S. Grains Council told Agri-Pulse that figure could jump to 70 percent this year.
Florentino Lopez, executive director of the Sorghum Checkoff, said part of the export boom to China – which has already committed to importing 280 million bushels of sorghum from the U.S. this year – could be attributed to looking at commodities as interchangeable ingredients.
“We’re not selling sorghum and we’re not really necessarily selling corn, we’re selling nutrients, we’re selling attributes,” Lopez said in an interview with Agri-Pulse. “As attributes, they go to satisfy the end consumer . . . and they can come from corn or they can come from sorghum.”
Cordero said most of the crop was going to China because of price shifting that made sorghum more expensive for markets like Mexico and Japan, meaning they could buy corn at a cheaper price. He said this led to the U.S. market “out-pricing ourselves from other markets” and China importing much of U.S. production.
With demand at an all-time high, Lopez said he is encouraging producers to decide if growing sorghum will work for their operation.
“Yes, today, China represents an extremely large portion of the trade that’s occurring with sorghum, but if we increase the supply side, now all of the sudden you would drastically change that,” Lopez said. “One of the things that we would constantly go back to is the amount of sorghum that’s available today -- the demand far exceeds it.”
While strong demand is a huge factor in planting decisions, Cordero said other factors may also come into play. Both Cordero and Lopez were quick to dismiss worries that an insufficient amount of seed stock would be an issue, but concerns about storage at harvest may play a role. Since many grain elevators are not set up to handle sorghum in addition to their current commodity inventory, producers would have to either build their own storage capacity or go straight to market at harvest.
Transportation costs are also evolving, and the geographic distribution of sorghum acres could also come into play. Sorghum’s heavy pockets of growth stretch from western Kansas to southwestern Texas and all along the Mississippi River basin. Exports in those regions typically go to ports in the Gulf of Mexico and then through the Panama Canal to get to China. But Cordero said a growing amount of sorghum was being shipped in containers to West Coast ports, avoiding the need to go through the canal.
“We had literally never exported sorghum on containers, now we’re doing it like it was (dried distillers grains.)” Cordero said, adding that container shipping costs had recently fallen to a point of better competition with bulk shipping. “So, that’s why I’m very positive that the market is able to evolve quickly. We’re doing things we never did before. Never.”
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