Additional acres needed as sorghum prices soar

Additional acres needed as sorghum prices soar

National Sorghum Producers calls on farmers to plant more sorghum to meet growing demand

It is time for America's farmers to stop thinking about growing sorghum and actually start planting it. That was the message from the National Sorghum Producers and the Sorghum Checkoff during the 2015 Commodity Classic in Phoenix.

National Sorghum Producers CEO Tim Lust said that this is the year for farmers to devote more acres to sorghum as both demand and price are at all-time highs. He said both foreign and domestic buyers are calling for more of the grain. The demand is driving producer profitability as prices in some areas of the Sorghum Belt besting corn farmers.

Market driven

SOARING SORGHUM: China calls for 280 million bushels of grain sorghum as cash prices reach historic highs in 2014.

When it comes to the foreign markets, China is a major buyer. Last year, China alone represented 90% of total U.S. sorghum exports with 168 million bushels. This year, China has committed to 280 million bushels of U.S. sorghum, or approximately 65% of the sorghum crop, according to Sorghum Checkoff Executive Director Florentino Lopez. Projections from the USDA indicate that exports will continue to increase through 2015.

Related: Thanks to China, Grain Sorghum Gains More Respect as Exports Climb

The rising popularity of sorghum in the food industry is opening domestic market doors for producers. "A number of years ago consumers did not know what sorghum was and what type of products sorghum was going into," Lopez explained. As the demand for non-GMO and gluten-free food grows, consumers and food industry executives are looking to sorghum. It serves as a wheat substitute for many food products. Today, sorghum can be found in cereals, breads and pastry items. "We have spread the message that sorghum can fit into the food industry nicely," Lopez said.

Tim Lust

Lust also stated that the ethanol industry is creating demand for sorghum. This value-added market is expected to increase 10% over last year. "To meet these growing demands," he said, "increased acres will be necessary this year."

Price is promising

The upside is that sorghum growers will be rewarded for their efforts to increase production as prices continue to remain stronger than corn.

Cash prices across much of the Sorghum Belt reached historic highs this past year. Lust, who was a marketing director before becoming NSP CEO, said that there are strong prices for both old and new crop sorghum. He noted that the Gulf Coast new crop basis soared to nearly $1.50 per bushel, with old crop basis still around $2. Even in states like Kansas, sorghum is 30 to 40 cents over the competition. In many locations across the central Sorghum Belt, new crop sorghum is trading at 10% premium to corn.

Florentino Lopez

"Clearly the market is sending a message to growers that from a profitability standpoint the market is asking for more production acres," he said. "When the market is there and represented from a demand pull standpoint, it helps growers to go for top yields and really produce."

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