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Is A U.S. Sorghum Comeback In Store?
For a lot of U.S. farmers, a relevant number may have passed unnoticed this year. The USDA reveals that China imported a volume of 84,000 tons of sorghum in 2011/2012. Just two years later, during the 2013/2014, the Asian giant imported 3.4 million tons.
So what would be behind those big figures and what could this mean for US growers? Chinese importers want a cheaper animal feed than corn and the they an unwillingness to buy GMO corn, but also for other reasons, experts say.
"Sorghum is very often used to produce alcohol [beverages] in China. The demand has grown and it is going to grow for a while. I would say for sure that the US acreage will increase and the crop in Australia too," explains Tim Murray, a trader at Australia's PentAg Nidera.
There is an estimated production of sorghum in the US during this season at 389 million bushels through an area of 8.1 million acres - up from 6.2 million acres in 2012/2013. But still the USDA puts early projections for the 2014/2015 crop as slightly smaller with 7.5 million acres. On the other hand, the production would jump to 430 million bushels from 389 million bushels this year.
For Florentino López, executive director at the U.S. Sorghum Checkoff, it is really hard to tell if a lot of corn acres would shift to sorghum in the coming crops. According to López, the reality of sorghum is very regional.
"For sure, sorghum pricing has been seen as an advantage to other coarse grain and it is due to the demand coming from China. But the decisions are made on the specifics, depending on the rotational needs of producers. We have worked heavily with the export market and we found opportunities in China", says López.
Marketing talk participant sw363535 revealed that the weather has been key in the high plains. "As and if the drought continues to move out of the high plains of the central US, there will be a big increase of milo acres in the US.The drought has limited our bushels for 4 years now and the water reserves in the area are depleting. Grain sorghum (milo) will be the crop of choice in large areas", his post reads.
On the other hand, participant childofthecorn from Nesbraka said that the milo just does not work in the part of the state he lives in. "I bought a new planter 3 years ago and didn't order sorghum plates for it and don't ever want to order them. Milo just dosen't work here in south central Nebraska. Ten years ago we had landlords that insisted on milo so we planted it , it was a dry, dry year. The milo made 8 bu/acre and dryland corn we had made 6. But the corn at least had chemical traits to kill weeds", he tells.
As of today, the US, Australia and Myanmar are the countries able to export the coarse grain to China. But there are people hurrying to be able to do that really soon. Last month, a phytosanitary agreement between Chinese authorities and Argentina allows the South American country to export sorghum in the 2014/2015 season. The surface for the grain increased from 1.4 million acres to 2.9 million acres in the last five years in Argentina. There, it could be specially attractive because is not taxed on exports as other crops like corn and soybeans.
"I can say that other advantage is that in Argentina all the inputs to grow sorghum are cheaper than to grow corn", reveals Pablo Fraga, a market analyst at BLD brokerage in Rosario, northeast of the South American country.
Recently, China has step up checks on US sorghum imports. In August, Reuters revealed that the Chinese authorities are being strict on checking impurities such as pesticide residues and heavy metals.
According to the US Grains Council, the issue is not subject of worries for exporters in the United States. "In spite of speculative rumors, no Chinese laws or regulations pose a threat to U.S. sorghum sales to China. We have heard that a few containers of sorghum were rejected upon arrival due to discovery of forbidden weed seeds. By far most U.S. sorghum shipments clear inspection without any problems", a statement sent by the Council says.
In the 2013/14 marketing year that ended Aug. 31, 2014, U.S. sorghum exports totaled 4.7 million tons, of which 4.15 million tons went to China. In the first two weeks of the current marketing year that began Sept. 1, U.S. sorghum exports were 111,500 million tons. In addition, Chinese buyers contracted 1.87 million tons of U.S. sorghum for future delivery.
This year, Texas passed Kansas as the biggest sorghum producer with 3 million acres of surface against 2.8 million acres. The third, Oklahoma, is far behind with 370,000 acres.