2018 Outlook: Grain Sorghum Climbs On Early Seed Sales?

December 22, 2017 06:00 AM
 
MIL

U.S. farmland was covered with 5.7 million grain sorghum acres in 2017. Based on early seed sales and a strong fall export market, grain sorghum acreage could be in line for a strong increase in 2018.

The farm bill is the top-tier issue going into 2018, according to Tim Lust, CEO of National Sorghum Producers (NSP). “Many issues before planting will impact the farm bill, particularly whether additional dollars are brought in through the budget process this winter. We don’t see this as a revolutionary farm bill with major changes, but it is still very important from the sorghum industry standpoint. Many of our growers chose PLC the first time around, but many didn’t, and they’re looking forward to the option or opportunity to switch.”

As always, trade is a heavyweight issue for growers in 2018. With NAFTA renegotiations under way, trade is front and center. Typically, 40-60% percent of U.S. grain sorghum is exported. China is responsible for 80-90% of export consumption, a remarkably aggressive number considering China bought U.S. grain sorghum at a near-zero level just a few years in the past. Lust believes a consistent, healthy export target is in the 40-50% range, a balance that would compete favorably with strong domestic support.

The fall of 2017 kicked off with strong grain sorghum demand. In early 2018, Lust expects total grain sorghum exports to China to top 1 billion bushels since China first purchased in 2013. “Basically, we’ve already sold 36% of our crop in the first three months of the marketing year. For example, when we see sorghum trading at 121% of corn at the Gulf today, China continues to be the dominating grain draw for our industry and we look forward in 2018 to seeing that demand continue.”

MIL 2

Most of U.S. sorghum success in China has been on the feed side. Yet, China has a massive alcohol market that utilizes grain sorghum and remains largely untouched by U.S. exports. “It’s really untapped and represents a huge market opportunity,” Lust describes.

However, domestic human consumption is the fastest growing segment of the grain sorghum industry. “The consumer market continues to grow and a lot of that is driven by contract acreage which is great for growers. Food consumption is the highest value portion on our industry,” Lust explains.

Looking back, the 2017 grain sorghum season was a “good micro in a tough macro,” according to Lust. Yield records weren’t broken (as happened in 2015 and 2016), but yields and demand were strong. However, the context was a 2-billion bushel corn carry and a global commodity situation characterized by depressed grain prices: “That’s the challenging overhang on what would have otherwise been an otherwise exceptionally good year for sorghum.”

Where will grain sorghum acreage go in 2018 after 5.7 million planted acres in 2017? “I don’t know about a number, but the direction looks good,” Lust adds. “Considering early seed sales, acreage is going to be up and it will be strongly positive.”

Back to news


Comments

 
Spell Check

No comments have been posted to this News Article

Corn College TV Education Series

2014_Team_Shot_with_Logo

Get nearly 8 hours of educational video with Farm Journal's top agronomists. Produced in the field and neatly organized by topic, from spring prep to post-harvest. Order now!

Markets

Market Data provided by QTInfo.com
Brought to you by Beyer
Close