Industry Leaders And Overseas Buyers Talk Sorghum Future

Industry Leaders And Overseas Buyers Talk Sorghum Future

Sorghum was a crop often overlooked in the U.S. just two years ago, but thanks to China’s strong appetite, it’s gaining popularity by creating a strong basis for farmers. We look at where this year’s crop as well as looking into where this year’s demand is going.

It’s been quite the year for sorghum producers in Texas as they battle two rounds of heavy rainfall.

“We’re going to make a crop this year. It’s just going to be a hard one,” said Raymondville, Texas farmer, Spence Pennington. While some producers are wrapping up planting, others are already starting harvest.

“If you talk to some of the old timers, they say this happened about 38 years ago. That’s the same type conditions when we had too much rain and it was too early,” said Texas Grain Sorghum Producers, Executive Director, Wayne Cleveland.

This year isn’t just about putting in a crop, but filling quite the demand overseas.

“We’re sold out, literally speaking,” said U.S. Grains Council Manager of Global Trade, Alvaro Cordero.

There are no restrictions on how much sorghum can be imported to China. So far this 2014/2015 marketing year, China has imported over 300 million bushels. In the 2011/2012 marketing year, China did not import any U.S. sorghum.

“They’ve taken over the market. They’re paying premiums that we haven’t seen. We’re seeing the highest prices we’ve ever seen historically for sorghum. Guess what, it’s a good problem to have,” said Sorghum Check-off High Value Markets Director, Doug Bice.

The country is already buying for the next marketing year. “We want to buy more from America later. {We have} Already sent some future contracts,” said Li Ling, Guangdong Jun Jie Ag Trading Company in China.

That’s why sorghum industry leaders say more acres are needed.

U.S. Grains Council Director of Programs in China, Robert Hurley said, “You hear concern from U.S. producers as to what Chinese policy is going to do, but on the flip side of that, the biggest concern is how much can the U.S. produce?”

The demand is so great, it’s even changing the amount we use on home soil.

“We have a whole different market with our domestic users in particular our ethanol plants we work with closely have a great demand for grain sorghum.

They just can’t quite reach the prices that Asia is paying for grain sorghum as we speak,” said Cleveland.

There’s some uncertainty if China could cap how much is imported to the country, but Bice is confident customers will step in.

“To us, it’s not a worry. We haven’t doubled our market. We haven’t gone crazy. We’ve had incremental growth,” said Bice.

Others aren’t so sure countries already buying could fill the demand.

“If they came back to buy, they will not be able to reach levels in China is doing because they’ve never imported that big of volume,” said Cordero.

International buyers are still eager to buy, visiting Texas earlier this month to check out the crop. A buyer from Mexico says since the demand increased, his company is using more of their own sorghum crop and buying corn.

“If the price stays the same where China keeps buying what it is buying right now, or if it increases, it wouldn’t make a change for us because we’re looking at the price. The difference does not justify to go to buy for sorghum from Texas unless the difference in prices decreases,” said Eleyson buyer, Daniel Prieto.

However, Prieto isn’t ruling out importing more if acres if needed. He says sorghum from Mexico loses quality quickly because of storage and an undeveloped crop.

“What we try to do if we get sorghum from Tamaulipas, we try to get as much as we can as soon as possible because we know with time, we’re going to lose that quality and we will switch to corn or Texas sorghum if that’s the case,” said Prieto.

Price also hangs over a Japanese buyer.

“We just care about price. We don’t care about productivity the farmer has,” said Sojitz Corporation buyer, Kota Suzuki.

Now producers just hope the weather cooperates the rest of the growing season so they can meet a demand that just keeps growing.

“For now, the basis looks good. The acres look good. We think we’ll be able to deliver on that so hopefully this will propel us into another strong year,” said Cleveland.

Since the export demand is so high, the crop hasn’t’ been used as much domestically. However, Bice says that’s changing. Industry leaders are working towards putting sorghum in the pet food industry and other niche markets. The Chinese are using it in swine diets and duck feed, while the Japanese are using it more in their own food.

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