China Wants More U.S. Sorghum05/05/2015
As farmers continue to feel the crunch of low crop prices and the pressures of keeping their farms profitable in a time of building global competition and higher input costs, many are looking favorably on planting more grain sorghum.
And for good reason.
According to the U.S. Grains Council, sorghum is the world’s fifth-largest grain by output. Its growing popularity is fueled by a number of contributing factors.
For one, compared to most crops, grain sorghum is relatively inexpensive to plant. In addition, it is drought tolerant and, perhaps best of all, global demand is growing. This is particularly true in China where farmers are using sorghum as a hog and chicken feed.
Another growing use of grain sorghum in China is production of a whiskey-like liquor called baijiu, a traditional drink often referred to as Chinese moonshine. It is, in fact, the most consumed alcoholic beverage in the modern world. So popular is this drink that even a Texas-based distiller is making baijiu to sell to the growing number of Chinese nationals living in the United States. The company reports domestic sales of the liquor climbed nearly 6 percent over last year.
Agricultural economists say the popularity of grain sorghum this year is fueled by stable prices in place since last year. While prices for corn, soybeans, rice and wheat to a lesser extent, have slumped over the last year thanks to a global surplus of stocks, sorghum prices have remained relatively stable.
Even farmers in the South are beginning to look at grain sorghum as a better choice for crop rotations as it provides hope to an area suffering serious problems with glyphosate-resistant weeds. Across the South, Southwest and Midwest, farmers are looking at grain sorghum as an attractive crop option.
Nationwide, sorghum acres are expected to increase this year by as much as 14 percent as cotton and soybean acres fall. That’s according to a Bloomberg Planting Survey released last month.
Acreage, exports climbing
Results of the survey indicate sorghum plantings will climb to the most in seven years and sorghum exports are expected to exceed last year’s exported crop to become the largest in 35 years. The United States is the world’s top grain shipper.
Most of these exports are headed to China.
Economists say numerous factors contribute to the uptick in Chinese demand. China’s ban on MIR 162 corn, which forced Chinese users to switch to sorghum to feed their livestock and poultry last year, may have spurred initial exports, other factors, including grain sorghum for ethanol and a growing use as a food additive helped increase its popularity in the Asian market.
Grain sorghum (or select parts of the grain) is also being used globally as a food additive, including for production of couscous. According to the Bloomberg survey, these many and varied applications of grain sorghum could lead to an estimated 8.148 million acres of domestic sorghum planted in 2015. Those numbers differ from USDA’s early season prediction that U.S. grain sorghum production would increase by a more modest 5 percent to a total of about 7.5 million acres.
The Perfect Storm
The Bloomberg Commodity Index has tumbled 27 per cent in the past year, including 21 per cent for corn, 24 percent for wheat, 34 percent for soybeans and 33 percent for cotton. On the other hand, cash price for sorghum in Kansas, the largest producer of sorghum in the nation, dropped by less than 1 percent over the last year.
Meanwhile, China is expected to import 7 million metric tons this year, the most ever recorded. But economists warn that number could falter once China begins accepting more corn shipments as the ban on MIR162 comes to a close later this year.
Even so, grain sorghum is expected to average $3.68 a bushel next season, down less than 20 cents a bushel from last year, and experts say while demand may fall once U.S. corn exports to China increase late in the year, the U.S. is expected to produce over 70 percent of all exported grain sorghum.
According to USDA estimates, producers will spend about $142 an acre to grow grain sorghum this year, potentially making it a better crop choice considering USDA cost estimates for other crops. Federal officials project farmers will spend about $497 per acre this year to grow cotton, over $350 an acre to grow corn, and $181 to grow soybeans.
Source: Logan Hawkes, Southwest Farm Press