U.S. sorghum prices have been on the rise in response to growing demand from Spain, with sorghum trading at a premium to corn on the international market.
Kurt Shultz, U.S. Grains Council director for the Mediterranean and Africa, reports Spain has imported 588,100 metric tons (23.1 million bushels) of sorghum since Sept. 1, 2006, through Aug. 9, 2007 - nearly 10 times that country’s sorghum imports for the same period a year ago. Italy, which did not import sorghum from the United States in 2005/06, has also rediscovered a taste for U.S. sorghum, importing 38,400 tons (1.5 million bushels) from the United States since the marketing year began in September.
The Council first introduced sorghum to Italy more than three decades ago. Drought in eastern Europe and heavy rains in France and the United Kingdom have dramatically reduced grain production in the European Union (EU), leaving the bloc with a record low level of grain stocks of about 2 million tons, mostly in Hungary, he adds.
“Geographically, Spain is far from the grain stocks in Hungary,” Shultz says, noting that internal transportation costs are high, making grain imports via ship more attractive. “It has a very large livestock industry but the feed industry doesn’t have feed ingredients right now. We should see continued demand for sorghum for the next six months as Spain will continue to import until their wheat harvest comes in next spring.”
“The high price of feed ingredients in the EU is going to put pressure on those governments as food prices are expected to go up 30 to 40 percent due to the grain shortage,” says Dale Artho, USGC chairman and a sorghum grower from Texas. Speaking from the Council’s sixth International Biotechnology Conference, Artho notes EU restrictions on biotechnology have largely eliminated U.S. corn and corn products as options for the feed industry there, further exacerbating the situation. The EU imported approximately 3.1 million tons of corn co-products in 2005 prior to the EU’s embargo on biotech products.
Shultz notes the EU grain market will remain volatile until they raise their ending stocks, but sees some obstacles to this goal. “We will likely see a reduction in EU set-aside land as more is brought into production, but the larger question is, what will this mean for their trade policies? With so many buyers out there, it will be hard for them to rebuild their stocks.”