Record Grain Sorghum Demand

Texas farmer Kody Carson planted more sorghum this year than ever before at the expense of corn and cotton. Further north, a field in Kansas farmed by Kent Winter has never been planted to sorghum until this year.

Why? Credit record grain sorghum demand, profit potential and climatic conditions.

"The sorghum industry is seeing more positive momentum than I can remember during my farming career," says Carson, National Sorghum Producers (NSP) chairman, during the association's virtual industry forum in March. He started farming near Olton in the mid-1980s.

DEMAND FIRSTS

China made its first purchase of U.S. grain sorghum for the 2021-22 marketing year a record 342 days before it starts on Sept. 1, according to USDA data. It bested the previous first new-crop sale to an export customer, which was Mexico in 2010, by 13 days.

Since China's initial new-crop buy of 5 million bushels (mb), importers (mostly China) have booked a total of nearly 63 mb as of the first week of June for the upcoming marketing year, according USDA data. The total for that time is also an all-time high.

Old-crop sorghum is sailing out of ports in record-setting fashion, too. The USDA announced on April 15 the previous week's exports were 33.9 mb -- enough to fill 10 to 12 Panamax vessels, according to NSP -- topping the previous high by more than 10 mb. The top destination was China. The USDA projects total exports for the 2020-21 marketing year at 307 mb, the highest level since 2015-16.

Florentino Lopez, United Sorghum Checkoff Program (USCP) international market development director, expects sorghum demand to remain strong after recent discussions with export customers.

"(Sorghum producers) should have a positive year unless something occurs that is out of their control, such as a change in trade policy," he says.

ACRES AND PRICES SOAR

Recent unprecedented demand and price hikes, along with weather-related factors, were a strong signal for Carson and other farmers to plant more sorghum this year. Nearly 6.5 million all-purpose acres were seeded, of which 5.8 million are for grain, according to the June USDA acreage report. Both 2021 acreage numbers are about 700,000 acres higher than last year.

Grain analysts and farmers say sorghum plantings could easily climb in years to come.

"I think sorghum is in a prime position to increase its acres," Winter predicts.

The average sorghum farm price was $3.34 per bushel in 2019-20, according to the USDA. The agency in June projected the average farm price for the current marketing year at $5.15 per bushel and $6.10 per bushel for the 2021-22 marketing year.

Sorghum cash bids in Kansas City in early July hit $6.89 per bushel, according to the USDA cash bid report.

China's insatiable appetite for sorghum to feed livestock and make an alcoholic drink called baijiu caused prices to soar during the past year. The country continues to rebuild its hog herd after it was decimated by African Swine Fever. China is also gobbling up U.S. commodities in an attempt to meet its obligations of the Phase 1 trade agreement.

"Trade is extremely important. It represents a large value coming back to farmers," Lopez explains.

Low cost of production is another big advantage for sorghum over other row crops, DTN Lead Analyst Todd Hultman adds.

The USDA estimates it will cost $324, on average, to grow an acre of sorghum this year. That's compared to $775, $697 and $466 to grow an acre of cotton, corn and soybeans, respectively.

U.S. grain sorghum yields averaged 73 bushels per acre (bpa) the past three years. It's not uncommon for yields to exceed 100 bushels or be double or more the national average. At $6 per bushel and 73 bpa, profit potential for the 2021 crop of $114 per acre exists with less financial risk than other row crops. If sorghum yields exceed the average, profits could be much higher.

"The way things look right now, sorghum is a very attractive choice for farmers," Hultman continues, noting other row crops are profitable, as well.

Hultman warns that prices rise and fall with Chinese demand, which typically accounts for more than 80% of U.S. sorghum exports and a bulk of production. Farmers may want to consider locking in favorable prices during planting season or shortly after for at least 25 to 50% of expected production, he adds, as a hedge against trade uncertainty.

"China either makes this market or shuts it down," Hultman asserts. "That's the roll of the dice with sorghum."

FARMER FIRSTS

A nearly 100-acre tract of land that Winter farms on shares near Mount Hope, Kansas, was planted to grain sorghum for the first time this year.

"The landowner told me years ago he didn't like sorghum ... he was more interested in corn and soybeans (to make money)," says Winter, president of the Kansas Grain Sorghum Producers Association. "I got a call last November from the landlord asking me to consider raising grain sorghum on his land. He realized the profit potential."

Winter plans to increase his full-season sorghum crop to 300 acres this year (planted in early June) and lower corn and soybeans plantings to 225 acres each. Last year, acreage between the three crops were split equally. Winter also produces 750 acres of hard red winter wheat and 100 acres of alfalfa.

After the wheat harvest in mid-June, Winter planted 200 acres of sorghum and 200 acres of soybeans into the stubble. Both are an expansion of double-crop acres.

"(Prices and demand) gave me a lot of confidence to increase double-cropping," Winter says.

Carson increased sorghum to about 1,500 acres -- triple his normal amount. He only planted 350 acres of corn, a drastic reduction, on land not suitable for sorghum. Carson also raises winter wheat, cotton and black-eyed peas, and has pastureland.

Sorghum profit potential, which Carson calls "very exciting," is part of his decision to up acres at the expense of corn. But, his primary reason is risk mitigation. Sorghum's low cost of production and ability to withstand heat and moisture stress makes it a good choice to plant.

Most of Carson's land is irrigated, but wells only pump a fraction of what they once did because of the dwindling Ogallala Aquifer. Carson is more reliant on rainfall than ever.

Only 5 inches of rain fell in many of his fields in 18 months up until mid-April. Since that time, plentiful rain has all but eliminated drought conditions in the Texas Panhandle. During the latest drought, Carson almost entirely relied on irrigation to grow crops. He knows that can easily happen again at any time.

"Sorghum is a savior for us," Carson says. "It's a sustainable, water-sipping crop."

RESILIENT SORGHUM

It takes a minimum of 11 inches of moisture to produce the first bushel of corn while sorghum requires 7 inches, according to Brent Bean, USCP agronomy director. He adds sorghum is usually more productive than corn when water availability is 15 inches or less.

Average sorghum and corn yields in Kansas last year were 85 and 134 bpa, respectively, according to USDA. Bean says it takes about 16 inches and 23 inches of water, respectively, to achieve that production.

Temperatures this growing season are expected to be several degrees above normal and precipitation below normal for the south and central Great Plains, where most of the sorghum is grown, according to DTN Ag Meteorologist Emeritus Bryce Anderson.

"Sorghum is a real hardy crop that can do a lot with a little (moisture)," he says.

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FOR MORE INFORMATION:

-- National Sorghum Producers: www.sorghumgrowers.com

-- United Sorghum Checkoff Program: www.sorghumcheckoff.com

-- Follow Matthew Wilde on Twitter @progressivwilde

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