China's nod to Brazilian sorghum may serve as test for US relations -Braun
The opinions expressed here are those of the author, a market analyst for Reuters.
By Karen Braun
NAPERVILLE, Illinois, Nov 20 (Reuters) -China on Wednesday gave Brazil the go-ahead to begin exporting sorghum to Chinese buyers, a somewhat peculiar move since Brazil hardly exports the grain at all.
But the United States has a dominant presence in the Chinese sorghum market, which is why the development could help gauge U.S.-China trade relations going forward, especially from January when President-elect Donald Trump begins his second term.
U.S. agricultural exporters have lost Chinese business to Brazil over the last several years, and many market-watchers fear this could continue if Trump dials up trade tariffs on China.
Global production of sorghum, a grain used for both animal feed and liquor, pales compared with that of corn or wheat, though it may compete locally with these grains. For U.S. exporters, sorghum trade with China brought in more than $1 billion last year.
The United States is overwhelmingly the world’s top exporter of sorghum and China almost exclusively controls imports.
The U.S. Department of Agriculture predicts that in 2024-25, the United States will account for 56% of all sorghum exports while No. 2 Australia will supply 23%. China is set for an 88% share of global imports.
Breaking this down further, some 94% of U.S. sorghum shipments in the recently concluded 2023-24 marketing year went to China, and three-quarters of last year’s U.S. crop hit the export market.
In other words, the United States is effectively growing sorghum for China. So where does Brazil come in?
Brazil’s sorghum crop has more than doubled in the last few years thanks to a boost in plantings, but the harvest remains about 40% smaller than the U.S. one. Further, its exports of the grain are currently negligible.
In Brazil, sorghum competes for area with the heavily exported second corn crop, so a Brazil-China sorghum relationship could help preserve the United States as top corn exporter. The center-west state of Goias produces about 40% of Brazil’s sorghum.
Meanwhile, U.S. sorghum is primarily grown in the Southern Plains. Last year, Kansas accounted for 53% of the national harvest and Texas claimed 24%.
Kansas is considered a “swing” acreage state given its diverse crop options. Following the 2018 U.S.-China trade war, Kansas farmers in 2019 flocked to corn at a much more significant rate than the national average and ditched beans at a relatively lower rate.
Therefore, China’s sorghum arrangement with Brazil could impact the U.S. acreage mix, potentially freeing up more land for corn, soybeans and wheat.
Ironically, sorghum had been the first U.S. agricultural casualty of the 2018 trade war, so the latest turn of events could cause a superstitious trader to feel uneasy about what might lie ahead in 2025.
Karen Braun is a market analyst for Reuters. Views expressed above are her own.
Graphic- Global sorghum supply and demand shares 2024/25 https://tmsnrt.rs/3ASuoYM
Writing by Karen Braun
Editing by Matthew Lewis
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