Only a handful of years ago, virtually no sorghum was exported to China. Now, China is the top buyer. While others within the grain sector are hoping to strengthen their relationships with the country, those in the grain sorghum industry tell us why 2015 looks to be an exciting year.
Within the last three years, the game has changed for sorghum producers.
“I think this demand is there and with this new crop basis, we hit a new plateau,” said Chairman of the National Sorghum Producers, J.B. Stewart.
Not long ago, Stewart says a third of crop went to export, a third to animal feed and the rest to ethanol production. Now, those numbers have changed, thanks to an increased appetite from China.
“This year, they’re on pace to buy three-fourths of our total sorghum crop,” said Stewart.
According to USDA’s Long-term projections, world sorghum trade is expected to increase within this decade by 8 percent. China’s sorghum imports jumped rapidly the past two years and are projected to grow about 1.7 percent per year over the next decade. Stewart says what has made sorghum a top buy is their non-GMO crop without tariff restrictions.
“This is mainly for their duck industry. Now they’re using sorghum for alcohol and vinegar and to use for their swine industry.
We’re in a position where we need more acres and bushels,” said Stewart. Despite the booming demand, analysts say China may be looking for a way within the World Trade Organization to stop or slow imports.
That’s talk that could have significant damage to the booming industry.
“The day China comes up and if in fact they do come up within the WTO guidelines to block grain sorghum imports, the new crop market will fall apart. Basis should stay good with old but new crop is what’s at risk right now,” said Water Street Advisory Senior Market Analyst, Arlan Suderman.
Despite the risk, producers are responding to the market. According to a National Cotton Council Survey, it’s expected cotton acres in Kansas will move into corn and grain sorghum. In South and West Texas, that shift continues.
“On our farm, we are increasing our acres. With the current price, you just have to. There’s no way around it. Right now, we can contract new crop sorghum plus 2015 basis at 40 cents over corn right now,” said McPherson, Kansas producer, Adam Baldwin.
Others don’t just anticipate a switch in the South, but also in the Plains.
“In the Midwest, some of that wheat will go into soybeans. That will go into sorghum in the Plains,” said Suderman.
While those on the National Sorghum Producers board say a GMO grain sorghum isn’t in the works, a tri-seed mutant variety, producing 30 to 40 percent more seeds is being researched.
“Tri-seed will be a game-changer and will hopefully push sorghum East to open more markets,” said Baldwin.
During a new era, producers are looking for more bushels and more acres, as new market potential continues to grow.
Stewart says when the organization started in the 1950’s, The U. S. was growing 35 Million acres of sorghum. Today, it’s between 6 and 8.5 Million. In Andale, Kansas, the cash price for old crop grain sorghum is $4.41 per bushel. New crop is $3.93.