Huge hike in volume of US sorghum imports into China

By Jane Byrne contact

- Last updated on GMT

© GettyImages/Mailson Pignata
© GettyImages/Mailson Pignata

Related tags: Sorghum, energy, China, ASF, Covid-19 recovery

Sorghum prices have rallied, with the return of China to the buyers’ table; they reached US$229 per ton in June, the highest price since July 2015.

Currently, sorghum prices hover around US$215 per ton, down from last month’s peak largely influenced by corn, said the US Department of Agriculture (USDA) in a report​.

China’s announcement of tariff exclusions following the Phase One agreement had an immediate impact on US sorghum exports mainly because of the sheer volume China purchases and its effect on prices, said the federal agency.

Following the January US-China Phase One agreement, in March China waived retaliatory tariffs on numerous agricultural products including sorghum. Sorghum imports into China are not subject to tariff-rate quotas, and US sorghum does not face any known quarantine or biotech issues that are likely to impede trade.”

Most US sorghum has been destined to southern China, where animal production is concentrated and feed demand runs high. Sorghum is commonly used as an energy ingredient in feed rations and competes with corn based on similar feed values.

“The uptick in sales and shipments indicates the need for competitively priced alternative feedstuffs and reflects policy changes.”

As of early July, US export commitments​on sorghum globally have more than doubled the entire volume sold in 2018/19 and are headed to reach the 2017/18 level, with China taking up around 75% of those commitments.

“US sorghum is highly dependent on exports relative to other grains, and China has been the most important outlet in recent years.”

Sorghum is a drought-tolerant cereal crop, grown widely for both forage and grain for food and feed purposes. The US has remained the top producer and exporter by a huge margin. The states of Kansas and Texas account for nearly three-quarters of US production.

An abundance of corn at competitive prices in the global market often dampens export prospects for US sorghum.

China purchases more sorghum than the rest of the world combined, according to the USDA.

China seeing faster-than-anticipated pace of recovery

Even though China has a large surplus of corn, domestic prices in both the grain-producing North and grain-consuming South have been higher than world levels, said the US agency.

“In fact, the national average price for wholesale corn has trended up since the end of last year and is currently the highest since March 2018. Even though the government started corn auctions in May from temporary reserves and almost all offerings at each auction have been sold, the additional volumes have failed to tame prices.

“The strong uptick in prices could be attributed to a faster-than-anticipated pace of recovery from the impact of COVID-19 lockdowns and the rebuilding of the hog sector from the outbreak of African Swine Fever (ASF).”

USDA projects China’s swine inventory to recover more than 70% of its pre-ASF level. 

“Moreover, worries that temporary reserves are running out and expectations that no other reserves will be opened for auction are apparently driving [Chinese] feed mills and processors to bid higher at auctions to secure supplies,”​ noted the report.

Reduced use of sorghum in the US

In 2018/19 when China was absent from the market due to trade actions and foreign demand was limited, most sorghum was used in the US domestic market for feed and for fuel ethanol, said the USDA.

“However, plentiful corn and slowing ethanol demand has dampened the need for sorghum, resulting in the largest ending stocks in 13 years.” 

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