Posted on Apr 22, 2015
China has consistently been a player in the U.S. grain sorghum market for more than two years now, and it is no secret they have dominated exports, leaving quite an impact on the industry.
This marketing year alone, China has committed to 310.2 million bushels, approximately 98 percent of total exports. What's more is that China has already begun aggressively purchasing grain sorghum for the 2015/2016 marketing year. As of April 21, 2015, China has committed to 47.8 million bushels.
While China had not purchased seemingly any grain sorghum prior to the 2012/2013 marketing year, their bold initiation into the U.S. sorghum market wasn't a complete surprise.
Alvaro Cordero, U.S. Grains Council manager of global trade, said the Sorghum Checkoff and the U.S. Grains Council began assessing potential opportunities in China in 2011 and worked toward developing markets in China throughout 2012.
"We were educating buyers in regard to price, quality, customers and suppliers, and we were able to initiate exports in early September 2013," Cordero said.
These efforts, in combination with a change in internal Chinese policy, escalated China's imports of U.S. grain sorghum. Aside from China's ban of the corn trait MIR162, Cordero said sorghum does not have an entrance quota or specific licenses that need to be submitted by the Chinese Ministry of Agriculture.
"Customers had no need to go to the competition that was being allocated by a quota or import permits," Cordero said. "These are the reasons why China began to buy sorghum, and these are why they want to buy more."
In one short year, China became the export leader, importing 168 million bushels of sorghum in the 2013/2014 marketing year, most of which was consumed by the livestock feeding industry.
Sorghum Checkoff High Value Markets Director Doug Bice said a large volume of the imported sorghum was initially feeding China's duck industry.
"As the year progressed, more and more swine feeders began utilizing grain sorghum," Bice said. "Swine inclusion rates have now reached 30-50 percent and are continuing to increase."
Today, grain sorghum is reaching into the beef, dairy, poultry and aquaculture feeding industries, as well. Alcohol consumption has also increased the demand for sorghum, as it is used to produce a Chinese liquor called baijiu.
Will China maintain their strong appetite for U.S. grain sorghum? Sorghum Checkoff Executive Director Florentino Lopez said that is unpredictable, but opportunities for growth exist. Visits with Chinese livestock feeders show potential for an increase in sorghum inclusion rates for livestock feed, and one of the largest areas for prospective growth is the use of sorghum in the Chinese human-food sector. Not to mention, China's general appetite for coarse grains has steadily increased over the last few years.
The United States Department of Agriculture's Foreign Agriculture Service's March 10, 2015, report projects Chinese imports of coarse grains will reach 618 million bushels this year, up 26.6 percent from 488.2 million bushels the previous marketing year.
"China has already proven they are leaning more toward sorghum than we initially expected," Lopez said. "They have begun purchasing sorghum from Argentina as well as at a higher premium from Australia, communicating demand is larger than the current U.S. sorghum supply."
These robust purchasing patterns are sending positive signals to growers, demonstrating Chinese demand for U.S. sorghum continues to grow. Lopez said he is confident farmers can grow more sorghum to meet the rising demand from both international and domestic markets.
March prospective plantings showed sorghum at 7.9 million acres, up 11 percent from the previous year. The introduction of the Chinese market is driving an upswing in the sorghum industry, and it is finally being felt at the heart of the industry — the farmer level.
"We've been seeing things today that we have never seen before such as pre-contracted planting and a positive basis over corn," Cordero said. "The fact is the product is not only being sold, but it is being sold at a premium that's benefiting our producers. It's very clear the fact that China has had an impact on the industry."