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China is Key to U.S. Sorghum Planting

Since China’s re-emergence onto the U.S. sorghum market in September 2013, U.S. sorghum exports to China have seen a successful 79-week run totaling in excess of 340 million bushels, and averaging 4.4 million bushels per week, according to University of Illinois analyst, John Newton. U.S. sorghum exports are expected to account for 68% of total U.S. sorghum consumption for the 2014/15 marketing year compared to 38% prior to 2013/14. Through January of the 2014/15 marketing year, exports to China are expected to reach 131 million bushels, or 90% of total U.S. sorghum exports.

Mr. Newton adds that sorghum’s price premium over corn in sorghum producing states, such as Kansas and Texas, combined with sorghum’s heartiness and healthy dryland yields in the face of dry conditions, makes it an attractive alternative to corn for 2015.

In the U.S. Department of Agriculture’s (USDA) Agricultural Projections to 2024 report issued in February, the department projects that China will continue to be a key importer of U.S. sorghum for the next decade, with estimates for U.S. sorghum exports totaling 230 million bushels per year through 2024/25. Given this trajectory, the USDA forecasts an increase in U.S. sorghum planting in 2015 of approximately 400,000 acres to reach 7.5 million acres.

Mr. Newton advises to proceed with caution however, reminding the industry that since 1999 China has been an inconsistent sorghum buyer at best, and noting that the latest Federal Grain Inspection Service (FGIS) report for March 5 indicated that sorghum inspected for export totaled only 2.1 million tons – down 74% from the previous week and the lowest in 36 weeks.

If additional sorghum acreage is planted, and China subsequently returns to the corn market, the extra sorghum will need to be absorbed at lower rates of return as livestock feed or as an alternative to corn in ethanol production.

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Lynda Kiernan is Editor with HighQuest Group Media and of the Oilseed & Grain News. If you would like to submit a contribution for consideration, please contact Ms. Kiernan at lkiernan@highquestgroup.com.

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