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China’s sorghum snub could turn U.S. farmers toward corn and soy

China may have just handed farmers in the U.S. Plains a good reason to maintain or increase the already elevated corn and soybean acreage this spring.

On Feb. 4, China launched an anti-dumping and anti-subsidy investigation into imports of sorghum from the United States in a move that many analysts see as politically motivated.

Regardless of the underlying reason, China’s sorghum probe invokes memories of the distillers dried grains (DDGs) investigation which ended a year ago with China imposing tariffs on imports of the U.S. feed grain.

DDGs are a byproduct in corn-based ethanol production and are used in livestock feed. Sorghum is also heavily used in feed and competes with DDGs, corn, and other grains.

Beijing’s heavy duties on U.S. DDGs have been palpable as Chinese imports of U.S. DDGs were nearly 90 per cent lower in 2017 than in 2016.

However, the United States has many other trade partners when it comes to DDGs, and its total exports through the first 11 months of 2017 were down only three per cent from the same period in 2016.

But exports are a big part of the U.S. sorghum market, and China has the leading role. On average, over the past five years, about 63 per cent of the sorghum produced each year in the United States ended up overseas, and about 80 or 90 per cent of those exports landed in China.

The United States’ total sorghum output pales in comparison to the country’s main cash crops. In 2017, farmers raised 364 million bushels of sorghum, 14.6 billion bushels of corn, 4.39 billion bushels of soybeans, and 1.74 billion bushels of wheat.

However, there may be some extra acres left over for corn and soybeans – or even one of their competitors – this spring if U.S. farmers decide that growing sorghum is unattractive. Domestic grain supplies are plentiful and sorghum is traditionally traded at a discount to corn, although cash prices across Kansas currently reflect the opposite after a smaller harvest last year.

Kansas is the leading producer of U.S. sorghum, producing 49 per cent of the grain on average over the last five years. Texas is second with 28 per cent.

Last month, the U.S. Department of Agriculture projected that winter wheat plantings for the 2018 harvest in the top grower of Kansas had risen three per cent over the previous year, when area fell to a 60-year low. But some independent sources have disputed this forecast, suggesting instead that there are fewer acres in Kansas this year.

Farmers in the sunflower state are not afraid to plant corn and soybeans if the going is good. In 2017, Kansas farmers planted 1.5 million more acres of corn and soybeans than in 2016, totalling an all-time record 10.65 million acres.

Similar to wheat, sorghum lost ground to corn and beans in Kansas last year, as farmers planted half a million fewer acres of the feed grain than in 2016.

Between Kansas and Texas, some 4.25 million acres were planted to sorghum in 2017, and many of those acres could be in play for 2018 in terms of corn, soybeans, or something else if China’s move ultimately sours the U.S. sorghum market.

Karen Braun is a Reuters market analyst. The views expressed here are her own.

About the author


Karen Braun is a Reuters market analyst based in Chicago. The views in this column are her own.


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