CHICAGO (Reuters) - U.S. farmers are poised to expand plantings of sorghum by nearly 20% this year, a far larger percentage than soy or corn acres, as the crop purchased mainly by China for use in animal feed and to make baiju liquor trades at a premium.
Although strong demand for corn and soybeans lifted futures prices of those crops to near-decade highs, farmers said sorghum is particularly appealing this year as it is more resistant to drought.
A rally in commodity crops has been driven by Chinese imports of feed grains, as the country’s hog herd recovers from a deadly pig disease. But continued demand is uncertain as China is also trying to reduce its reliance on imported crops like corn.
“China is the joker in the deck. Maybe it even represents two jokers, because it is such a big player,” said Kent Winter, president of the Kansas Grain Sorghum Producers Association, who farms outside Wichita.
The U.S. Department of Agriculture (USDA) in March projected U.S. sorghum plantings for 2021 at 6.940 million acres, up 18% from the previous year and the most since 2015. Seedings of corn, the most-planted U.S. crop, were seen roughly flat at 91.1 million acres.
Some observers expect sorghum acreage will rise even further when the USDA releases updated U.S. acreage estimates on June 30. Private analytics firm IHS Markit Agribusiness recently projected U.S. 2021 plantings at 7.350 million acres.
“We need that bump to meet demand and the need for supplying our customers,” said Jesse McCurry, executive director of the Kansas Grain Sorghum Commission.
U.S. production of sorghum, also called milo, is centered in Kansas, where it competes for acres with corn, and in Texas, where it competes with cotton. Planting of the U.S. corn, soy and cotton crops is nearly finished, but sorghum planting was only 72% complete nationally by June 13.
USDA expects a 2021 crop (marketing year 2021/22) of 10.846 million tonnes, the largest since 2016/17 and up 14% from a year earlier.
Winter said U.S. Plains farmers have watched cash sorghum prices trade at a rare premium to corn.
“A lot of guys started making plans last winter, based on what was a new-crop bid for 2021 sorghum, and it has hung in there. It’s an attention-grabber,” he said.
Sorghum yields about two-thirds as many bushels per acre as corn in Kansas but it tends to be cheaper to grow, and drought tolerance makes it well-suited to arid areas where corn and soybeans struggle to thrive.
China has booked 917,000 tonnes of new-crop U.S. sorghum so far this year, up from 305,000 tonnes at this time a year ago. USDA expects total sorghum exports of 8.9 million tonnes in 2021/22, just under all-time record exports in 2014/15. But traders caution that high prices could dent the grain’s appeal.
“Demand for U.S. sorghum is so-so this year because prices are too high,” said a grains trader with an international trading house. “It is not super economical to buy sorghum to use in feed.”
Reporting by Julie Ingwersen; Additional reporting by Hallie Gu in Beijing; Editing by Bill Berkrot
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