China is scaling back on its imports of feedstuffs such as corn, sorghum and the ethanol co-product distillers dried grains (DDGs), with U.S. sorghum exports hit the hardest, says the monthly Grain: World Markets and Trade report. USDA slashed its forecast of sorghum imports by China by 30 percent, or 4 million tonnes. Since the US is the primary supplier of sorghum to China, exports are expected to fall by 105 million bushels, or 24 percent. The Chinese government adjusted its support prices to encourage consumption of domestically grown corn, with a resulting lower need for imported feedstuffs.
U.S. growers expanded sorghum plantings by nearly 23 percent this year to chase high market prices created by Chinese demand. This year’s harvest of 594 million bushels is the largest since 1999 and 37 percent larger than the 2014 crop. With the huge crop and an abruptly smaller market, sorghum prices are forecast to average $3.60 a bushel this marketing year, slightly below corn prices, instead of the $4 that was forecast in October.
“The discount for sorghum relative to corn in the internal U.S. market sharply increases prospects for domestic use,” says USDA. Lower-priced sorghum will displace 75 million bushels of corn at ethanol plants and livestock feeders will use more more sorghum in animal rations, said USDA in its monthly WASDE report.
Sorghum usually sells for the same or a slightly lower average price than corn, but last year it notched a 33 cent-a-bushel premium because of Chinese demand. Four out of every five bushels of U.S. sorghum was exported during the 2014/15 marketing year when exports usually claim a little over half of the crop. While sorghum sales surged, China rejected dozens of shipments of U.S. corn on grounds they included a GMO variety not approved for import. Sorghum is the second-most widely grown U.S. feed grain after corn.
More than half of the world’s stockpile of corn would be held in China at the end of this marketing year, estimates USDA, largely due to less grain being fed to livestock. The U.S. corn stockpile would be the largest in 10 years. “U.S. supplies remain uncompetetive in many foreign markets as corn from Brazil continues to undercut U.S. offerings,” said USDA.
The strong dollar and the third record world wheat crop in a row will limit U.S. wheat exports to 800 million bushels, the lowest in 44 years, said USDA. The U.S. soybean crop is forecast for a record 3.981 billion bushels, just over 1 percent larger than the previous record set last year. The soybean stockpile would be the largest in nine years.