US farmers likely raising a glass to China, with sorghum exports soaring
Updated: 2015-04-09 04:26
By William Hennelly(China Daily USA)
China likes its baijiu, which is becoming more popular around the world. A byproduct of that demand is a booming US export market for sorghum.
Sorghum exports this year are expected to make up 62 percent of the total amount harvested, the highest proportion since 1975, according to the US Department of Agriculture (USDA) Economic Research Service. The department projects sorghum plantings to increase by nearly 400,000 acres this year to 7.5 million.
Sorghum is the main grain in baijiu, a 60-to-100-proof drink, the national spirit of China and the most consumed alcoholic beverage in the world.
Sales of baijiu in China rose 5.5 percent in 2014, according to Nielsen research.Dictionary.com defines sorghum as "a cereal grass, having broad, cornlike leaves and a tall, pithy stem bearing the grain in a dense terminal cluster".
China began increasing purchases of US sorghum in 2013 to supplement its own production (around the same time it suspended imports of a genetically modified corn (MR162) from the United States), which it uses mostly for livestock feed and to convert into alcohol. The ban, however, was lifted in December, which could potentially reduce demand for sorghum. Sorghum is not genetically modified and is also gluten-free, which has more companies using it in food products.
The USDA forecasts sorghum exports to China this year to increase 68 percent, to 7 million metric tons, an all-time high. In the current marketing year, which started in September, 92 percent of US sorghum exports have gone to China.
The strength of the export market has lifted the price of sorghum, which is forecast to average 4 percent more than corn for the year. Sorghum typically sells at a 5 to 10 percent discount to corn. There is no futures market on sorghum.
The Bloomberg Commodity Index fell 27 percent in the past year, including 25 percent for corn to $3.7625 a bushel in Chicago. Wheat dropped 27 percent, and soybeans slipped 34 percent.
Farmers in the US Great Plains states are finding that sorghum is cheap to grow and is drought-resistant, and with soybeans, wheat and corn in bear markets due to a glut, steady demand from China has kept a bid under sorghum.
Clayton Short has a 2,200-acre farm in Kansas on which he grows wheat, soybeans and sorghum.
"We reduced wheat acres by about 15 percent, and we reduced soybeans by about 15 percent. That's all going to grain sorghum," Short told Global AgInvesting. He said the entire sorghum harvest will be shipped to China. "We can change the crop rotation to what we feel can make us the most profit per acre," he said.
Bloomberg.com reported that some farmers in Kansas are being offered 35 cents a bushel more for sorghum planted this spring than corn, said Dan O’Brien, an economist at Kansas State University. The USDA estimates it will cost $142 an acre to grow sorghum this year, as opposed to $497.26 for cotton, $350.33 for corn and $181.07 for soybeans.
"China’s demand for coarse grains is significant," said Bryan Lohmar, US Grains Council director in China. "The council and the U.S. sorghum industry have worked hard for three years to introduce sorghum as a new option for China’s producers. This program has begun to yield very impressive results, and we expect China to remain a robust market for U.S. sorghum in the future."
The council said that 10 percent of the sorghum that China imports goes to make baijiu, which is also becoming trendy in the US.
"And now this foreign spirit is making its way to the US," reported dining website Eater.com in February. "Peking Tavern, a hip Northern Chinese restaurant in Los Angeles, mixes baijiu into a slew of cocktails, as does Korean eatery Drunken Dragon in Miami and New York's Asian fusion den Buddakan."
Lumos, a bar focused on baijiu-based cocktails, is expected to open soon in downtown Manhattan.
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