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U.S. Sorghum Prices Rally with China’s Return to the Market
China’s announcement of tariff exclusions following the Phase One agreement had an immediate impact on U.S. sorghum exports mainly because of the sheer volume China purchases and its effect on prices. As of early-July, U.S. commitments1 to the world have more than doubled the entire volume sold in 2018/19 (Sep-Aug) and are headed to reach the 2017/18 level. About threequarters of the commitments have been slated for China. U.S. sorghum is highly dependent on exports relative to other grains, and China has been the most important outlet in recent years. Typically, sorghum prices closely track movements of corn prices. With the return of China, sorghum prices have rallied, reaching $229 per ton in June, which was the highest since July 15. Currently, sorghum prices hover around $215 per ton, down from last month’s peak largely influenced by corn. Corn prices rebounded in recent months supported by larger-than anticipated corn area cuts in USDA’s June Acreage report and cooler and wetter weather forecasts for the Corn Belt.
U.S. Sorghum is Competitive in China
Sorghum is a drought-tolerant cereal crop, grown widely for both forage and grain for food and feed purposes. Sorghum is commonly used as an energy ingredient in feed rations and competes with corn based on similar feed values. An abundance of corn at competitive prices in the global market often dampens export prospects for U.S. sorghum. The states of Kansas and Texas account for nearly three-quarters of U.S. production. The United States has remained the top producer and exporter by a huge margin, although the amount of exports has been highly volatile since 2013/14 when China turned from U.S. corn to sorghum2
