Posted on May 02, 2016
Compared to traditional demand, 2015 was an irregular year for the sorghum marketplace. While U.S. sorghum exports more than doubled, small but significant rises in the consumer and pet food industries are creating unique marketing opportunities for growers in 2016.
With 597 million bushels harvested from 7.9 million acres, the 2015 sorghum crop was the largest since 1997. With a farm-gate price valued at $1.97 billion, the 2015 sorghum crop was the highest valued in the last 20 years. With farmers producing almost 38 percent more sorghum than the previous year, where did it all go?
The 2014/2015 marketing year set the stage for record-breaking U.S. sorghum exports. With 352 million bushels of grain sorghum crossing international boundaries, this year represented the largest sorghum export total in history. Adding tremendous value to sorghum farmers and the American economy, U.S. sorghum exports were valued at more than $2.1 billion.
China led the charge with 328 million bushels, representing 93 percent of the sorghum export market. While China has remained an active buyer of U.S. grain sorghum in 2016, other countries are stepping up. Ten countries have committed to sorghum exports thus far. Only half way into the marketing year, commitments have reached 72 percent of last year’s export totals.
“Better price opportunities, availability and increased knowledge of use have made it attractive to non-traditional markets,” said Florentino Lopez, Sorghum Checkoff executive director.
Traditionally dominated by China, Mexico, Japan and Korea, the sorghum export market has seen commitments from Pakistan, Columbia, Venezuela, South Africa, Indonesia and Haiti this year. In fact, this year marks the first time in 10 years sorghum has been exported to Pakistan. From February to March, Pakistan committed to 6.3 million bushels, almost four times larger than their previous annual record.
Ethanol only accounted for 3 percent of the sorghum market in 2015, but despite the reduced use among ethanol plants, 2015 was significant for sorghum due to large investments in the crop’s future. With the creation of the U.S. Department of Energy Transportation Energy Resources from Renewable Agriculture program, the U.S. Department of Energy has committed $70 million for sorghum to be researched as a model feedstock.
In addition, the Biofuels Infrastructure Partnership was established in 2015 to fund the installation of blender pumps and other infrastructure necessary to move higher blends of ethanol into the marketplace. This initiative has the potential to impact more than 300 stations across the Sorghum Belt with approximately 940 new pumps and 40 new tanks installed. More ethanol moving into the marketplace means more demand for ethanol feedstocks, leading to more demand for sorghum.
“Things are looking up for sorghum’s future in renewables. It is estimated 120-150 million bushels of sorghum will go toward ethanol this year,” said John Duff, Sorghum Checkoff renewables director. “These gallons need to make it into gas tanks. The establishment of these pumps can create the demand we need to see that happen.”
Sorghum food consumption increased by nearly 40 percent compared to 2014 and secured a three percent overall market share. More than 350 products on grocery store shelves contain sorghum, and mainstream brands are adding sorghum to new product formulations every year.
“Based on all the product testing that is currently ongoing for sorghum within key market segments, especially in the snack industry, we expect 2017 to be a breakout year for sorghum in various food sectors,” said Doug Bice, Sorghum Checkoff market development program director. “It wouldn’t be surprising if the number of sorghum-based foods exceeds 500 product lines by late 2017 or early 2018.”
Similarly, the companion animal industry is demanding high-quality ingredients to incorporate into their formulations. Thirteen brands are currently using sorghum as a primary ingredient in more than 60 product lines, which consumed nearly 12 million bushels in 2015. Presently, the pet food industry comprises 2 percent of the sorghum industry with room to grow.
Consuming nearly 90 million bushels of grain sorghum, the livestock industry represented 15 percent of the sorghum demand portfolio in 2015. Sorghum continues to be utilized in swine, poultry, dairy and beef cattle feed.
“2015 was a great year for sorghum producers. We know our efforts can make a difference in continued market development and offer options for producers,” Lopez said.
Though market prices adjust regularly, the Sorghum Checkoff will continue working to secure market options that will offer sales opportunities. While ethanol, exports and livestock have traditionally dominated the sorghum market, new opportunities in the consumer market continue to present themselves.
“Without question, market opportunities for sorghum have increased in number and strength,” Lopez said. “Efforts remain to encourage market growth at all levels. Not only will the checkoff work to add new opportunities, but we will also work to enhance sorghum’s position in existing markets.”