By Michael Hirtzer
CHICAGO, Dec 29 (Reuters) – Roaring Chinese demand for cheap
animal feed helped fuel the largest week of grain sorghum sales
seen by U.S. exporters in nearly two decades, U.S. Agriculture
Department data showed Monday.
China’s appetite for the corn substitute is expected to
remain strong for the time being, despite Beijing’s recent
approval of one GMO corn variety, possibly signaling a renewed
appetite for U.S. corn imports and expanding a lucrative market
for American farmers.
Exporters sold 584,324 tonnes of U.S. sorghum in the week
ending Dec. 18, the largest weekly sale since 1995 and the
second largest total on records dating back to 1990, USDA data
showed. Shipments of 332,867 tonnes, all to China, were the
biggest since 1992.
The sales underscore months of Chinese interest in sorghum,
after the country rejected more than 1 million tonnes of corn
that contained an unapproved genetically modified variety
developed by Syngenta AG.
The drought-resistant grain, also called milo, has long been
used as a substitute feedstuff by budget-conscious livestock and
poultry producers. In China, it is also used to produce alcohol
and other foods.
For China’s protein sector, sorghum’s appeal is clear: it is
often cheaper than corn, and is not genetically modified nor
subject to corn’s import tariffs and quotas.
As a result, “the Chinese program is very aggressive. The
only thing that would stop it is some type of tariff,” said Mike
O’Dea, a trader at INTL FCStone Inc.
The United States is forecast by USDA to export 5.8 million
tonnes of sorghum during the 2014/15 season – more than half of
the harvest – with nearly 5 million of that likely heading to
China.
Sorghum made a comeback among U.S. farmers two years ago
during a scorching drought. Sorghum is typically less expensive
to plant than corn, but also tends to yield less per acre.
There is no sorghum futures contract and the grain is often
priced at a discount to Chicago Board of Trade corn.
However, on Monday on the Ohio River in Cincinnati where the two
crops compete, corn was $4 per bushel while sorghum fetched
$4.38, according to USDA.
That pricing premium has convinced at least one farmer to
change his spring planting strategy. Tom Morton, whose farm is
in the top sorghum growing state of Kansas, said he will
increase his sorghum this spring by 100 acres.
And for the first time in 15 years, Morton will not plant
any corn.
(Editing by P.J. Huffstutter, Karl Plume and Richard Chang)