April 6, 2015
Native to Africa, Sorghum is heartily resistant to drought, cheap to plant (costing $142 per acre including seed, fertilizer, and chemicals, compared to $350.33 per acre for corn and $187.07 for soybeans), and in high demand in China where it is not subject to quotas as is corn or soybeans, is commonly used to make a whiskey-like liquor called baiju, and is used to feed the country’s enormous hog herd.
Sorghum is the fifth most grown grain in the world by output. Mostly used in animal feed or to make ethanol, it is also used in human consumption including in the production of baijiu, couscous, or popped like popcorn.
U.S. plantings of sorghum are estimated to jump 14% to 8.148 million acres according to a Bloomberg survey, compared to the latest estimate from the U.S. Department of Agriculture (USDA) which forecasts a 5% increase in acreage to 7.5 million acres.
Exports of sorghum from the U.S. are on pace to be their highest in 35 years with most of the shipments bound for China. For the season beginning September 1, the U.S. is forecast to account for 74% of global sorghum exports, compared to a 15% global share for wheat.
China began increasing its sorghum imports in 2013, and the USDA predicts that imports for this year will jump 68% to a new record of 7 million tons. The U.S. Grains Council estimates that 10% of those shipments will be used for the production of baijiu. Domestic sales of the liquor climbed 5.5% in 2014 year on year according to data from Nielsen, and Chinese producers are looking to expand sales onto Western markets which could help support continued growth.
However, whenever a market soars, the question usually remains if that growth can be sustained. Even if exports decline, U.S. farmers will likely continue to plant sorghum as 28% of the High Plains are in moderate to extreme drought compared to 11% at the beginning of 2015, and sorghum is offering returns as much as .85 cents per bushel more than corn.
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