Sorghum prices may top corn values this season for the first time in eight years, at the US farmgate level, thanks to soaring demand from China, which is “bidding up prices”, to the detriment of some traditional buyers.
The US Department of Agriculture, expanding on upgraded crop forecasts last week, highlighted that it was, unusually, forecasting corn and sorghum prices averaging the same in 2014-15, at $3.20-3.80 a bushel.
Sorghum prices have, over the last 10 years, averaged 6.4% cheaper than corn values.
However, the USDA highlighted the potential for sorghum to turn the tables, noting that “sorghum prices rose above corn in 2006-07”, when they reached $3.30 a bushel. Corn prices average $3.03 a bushel that season.
“A rise in sorghum prices to corn price levels, and potentially beyond, is not without precedent.”
‘Sluggish corn exports’
The forecast reflects in part some disappointment over US corn exports – following a record harvest – with a firm start to 2014-15 for shipments softening last month.
Corn exports, as measured by cargo inspections, “for November, at only 2.4m tonnes, were sluggish”, the USDA said, flagging limitations to US infrastructure in saying the performance was “partly because of heavy soybean exports and lingering logistical issues”.
By contrast, US sorghum exports are seen at a seven-year high of 5.8m tonnes, supported by record Chinese imports of 5.0m tonnes “based on the pace of shipments and sales”.
On the US export market, sorghum was quoted at $251 a tonne late last month, widening its premium over corn to $61 a tonne, according to the International Grains Council, which also noted that “buoyant demand from China continued to underpin the market”.
‘China bidding up prices’
The popularity of sorghum reflects in part the absence in China of tariff rate quotas, but also the lack of controversy over genetically modified varieties, as there is in corn.
US exports of corn to China have slumped to 57,300 tonnes so far in 2014-15, compared with 1.96m tonnes as of the same period of last season, as rejections of cargos over claims of containing a Syngenta variety unapproved in Beijing have prompted importers to seek alternative origins or grains.
There is also talk of Ukraine being unable to deliver on all the 1.1m tonnes it has contracted to sell to China, as part of a loans deal.
US sorghum exports to China, meanwhile, have soared four-fold to 1.79m tonnes since the start of September, with a further 2.24m tonnes on order, taking total commitments to 4.03m tonnes, compared with 1.05m tonnes a year ago.
“However, with China bidding up prices, Japan’s [sorghum] imports have slowed,” the USDA said.
US sorghum exports to Japan, which has historically vied with Mexico to be the top importer of the grain, have tumbled by 66% to 39,800 tonnes so far in the US 2014-15 marketing year.