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Bullish sorghum market going its own way
Sorghum has long been thought of as a corn market price follower. Where corn goes, sorghum's bound to follow, right?
Wrong. These days, tight global supplies and dwindling U.S. sorghum acres have that market taking on a bullish life of its own, according to a recent report from the U.S. Grains Council (USGC), a body working to develop and expand global markets for U.S. sorghum.
"Sustaining exports is critical to sustaining sorghum prices," says USGC's Erick Erickson. "Additional support from Council members like the United Sorghum Checkoff Program allowed us to support key markets in Mexico and Japan, but also bring along emerging markets in Morocco and Egypt."
Recent export sales numbers show the potential value of opening such markets for U.S. sorghum farmers, according to Virgil Smail, Sorghum Checkoff executive director.
"Exports are very important for U.S. sorghum producers, and we've seen some success in growing markets in new regions," Smail says. "The strength of exports supports sorghum prices, which in turn makes sorghum more attractive to farmers and those looking to invest in the crop."
Continued strength in exports contributed to USDA’s January estimate that on farm sorghum prices will average $5.50 per bushel in 2010/2011, ahead of the $5.30 per bushel estimate for corn.
In its January report, USDA estimated U.S. sorghum exports would be 150 million bushels for 2010/2011, and while less than 2009/2010 exports, the figure is 7 million bushels greater than exports in 2008/2009 when the average on farm price was $3.20 per bushel -- $2.10 a bushel less than the current estimate.
"Council programs focus on building strong relationships and partnerships with customers around the world, and in the end, partnerships between U.S. sorghum sellers and foreign buyers help drive sales and demand," Erickson says.