Blame Wheat Prices, Not Corn

Market ups and downs bumpy for sorghum growers.

Published on: Jan 23, 2009

Sorghum prices have bounced like a ball off the barn roof in the past year. There are several reasons, Jay O'Neil, a specialist with the International Grains program at Kansas State University told sorghum growers at three sorghum cropping profitability seminars held across southern Nebraska last week.

Demand for U.S. sorghum in export markets was strong last year, says O'Neil. There was drought in Europe that reduced grain harvest. Australia, the United States and Canada all had reduced wheat harvests as well, so wheat prices rose, and there was less feed wheat available.

That prompted European livestock interests to cast around for alternate sources of non-GMO livestock feed. U.S. sorghum fit the bill. That produced a strong pull on available sorghum supplies toward a market that usually doesn't exist. Monetary exchange rates favored the euro over the dollar too. Sorghum prices rose, and ethanol manufacture in the U.S, got the blame.

But the 2008 harvest was good in Europe, the U.S., and Australia. There's plenty of feed wheat and other grains available to feed European livestock and poultry, so U.S. sorghum exports across the Atlantic have slumped. Plus there's a worldwide recession.

Also, says O'Neil, the U.S. has traditionally supplied a sorghum feed grain market in Mexico because of Mexican limits on corn coming south of the border. Last year, with full implementation of NAFTA in effect, corn restrictions were lifted, and when sorghum prices went higher than corn, Mexican livestock feeders bought corn.

So, both sorghum exports, and sorghum prices have slumped. After enjoying a spell where grain sorghum prices traded above the price of corn, sorghum is now priced under corn.

But that may stimulate demand, says O'Neil. Price matters in Mexico. When corn supplies are used up, livestock feeders there may return to sorghum. Feeders in the U.S. may decide to feed more sorghum, too.

Ethanol plants are also taking note of the difference in price. However, the plants may have some educate users of distillers grains. While the nutritional value of corn and sorghum distillers grains is virtually the same, feeders may be off-put by the red, rather than yellow color of the product.