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Sorghum Popularity Growing

Sorghum Popularity Growing

U.S. Grains Council says a variety of factors are affecting interest in and popularity of sorghum

Many commodities are feeling like second class citizens following a poor Chinese economic report and aggressive Federal stimulus purchasing of U.S. treasuries, which are channeling investors to U.S. equities, the U.S. Grains Council said. But one commodity is hot right now, and it isn't even traded on any exchange: sorghum.

U.S. Grains Council says a variety of factors are affecting interest in and popularity of sorghum

Given corn's dominance in most markets, some buyers unfamiliar with sorghum have traditionally considered it a "substitution" energy feedstock, in place of corn, for animal rations, USGC said. As much as three out of every 10 bushels of U.S. sorghum would get shipped to Mexico alone in past years.  This year, Italy and China have bought U.S. sorghum for the first time on a large scale.

"There's a definite buzz around the world regarding sorghum right now," said Kevin Roepke, USGC manager of global trade. "The last seven days are proof of that. With corn planting progress at all-time lows, people want to take advantage of new crop sorghum being harvested already in July to bridge the gap until new crop corn comes out in October."

This week, the USDA announced a sale for 120,000 metric tons (4.7 million bushels) to an unknown buyer, on the heels of the historic announcement of Chinese sorghum buying just last week.

"The Council is also getting requests from Latin America wanting samples of U.S. sorghum and containerized shipments," added Alvaro Cordero, the Council's lead for sorghum programs. "Traditionally, sorghum is only shipped in bulk via rail or vessel, but recent market conditions prove the industry must evolve to meet the demands of a diversifying customer profile."

Sorghum's proximity to the Texas coastal gulf makes it a prime target to take advantage of burgeoning Latin American economic growth. Additionally, the completion of the Panama Canal project in 2015 may change the dynamic of container freight for U.S.-Asia trade. But internal infrastructure improvements are crucial for sorghum growers to capitalize on this dynamic.

"The DDGS industry has built up modern transloading locations to take advantage of cheaper intermodal freight as quickly as possible. This model could be replicated in the sorghum belt as well," Cordero said. "This business model needs to be enhanced for reliable and streamlined trade to occur in the near future."

Domestically, sorghum is considered a rotation crop throughout much of the Western plains, USGC notes. However planting intentions are at a five year high and up almost 40% in only two years, according to USDA figures. Bolstered by high grain prices and soft cotton prices, some Texas farmers are opting for sorghum in place of cotton.

"The number one determining factor of sorghum's price is and forever will be the price of corn. Some places in the United States just can't grow corn, and the next best thing is growing sorghum," commented Roepke. U.S. farmers intend to plant over 7.6 million acres of sorghum—up more than 22% from last year.

Source: USGC

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