Texas row crop producers might have the luxury of choosing between sorghum, corn and cotton as all three commodities are seeing high prices with the 2021 planting season underway, according to a Texas A&M AgriLife Extension Service expert.
Dr. Mark Welch, AgriLife Extension grain economist, said farmers will have options in 2021 based on market prices but may make decisions based on soil moisture levels in their location, input costs, past yields and crop insurance protections.
“This year is unusual in so many ways, but virtually every summer crop is looking at strong prices, and every commodity is looking to buy acres of cotton, corn, sorghum and soybeans,” Welch said. “Texas farmers know what works best for them, and it will be interesting to see what they actually plant because there is strong competition among the various row crops.”
Grain sorghum acres have been strong historically in Texas, though acres have dipped in recent years due to better revenue for corn and cotton, he said. But sorghum’s current price premium compared to corn may reverse that trend and help it eclipse planted corn acres for the first time since 2015.
Welch said high prices, low input costs, exceptional drought tolerance and strong export demand for feed grain from China make sorghum a more competitive option for Texas producers than seen in recent years. China’s tariff system increases import costs for corn and wheat when imports exceed certain levels. Sorghum and barley do not face the same tariff restrictions.
This gives U.S. sorghum, which accounts for about 80% of global sorghum exports, an advantage in the market that consumes the most food and feed grain globally, Welch said. China accounts for about 80% of global sorghum imports.
“We have very little export competition,” he said. “So, when it comes to exports, you have basically one buyer and one seller, and that can be scary when tensions are high and you’re dealing with a trade dispute. But recent projections from the U.S. Department of Agriculture support exporting consistent levels of sorghum to China for the next several years.”
Welch said steady exports of grain sorghum to China is a big part of its price surge.
Average cash prices for sorghum are $6.40 per bushel compared to $5.90 per bushel for corn, giving sorghum a 50 cent per bushel cash premium over corn, he said. For perspective on how far sorghum prices have come, Welch said farmers were getting $3.40 per bushel for corn and sorghum was $2.95 per bushel, a 45-cent discount to corn, in early August.
Sorghum also has an input cost advantage over corn and cotton, he said. Sorghum seed cost for planting can be much less than that of other crops and generally has lower use requirements for fertilizer and water. However, the 10-year average sorghum yield in Texas is about half that of corn, 57 bushels per acre compared to 128 bushels per acre.
Another advantage high-yielding crops like corn and cotton have in this current environment is crop insurance protection. Higher base prices this spring combined with relatively higher average yields can provide higher levels of revenue protection compared to crops with lower average yields.
In addition, for insurance products with a March 15 sales closing date, the base price for corn was $4.58 per bushel compared to $4.40 per bushel for sorghum. These may be important considerations for farmers facing persistent drought conditions that may extend into the 2021 crop year, he said.
“I think we are going to see an increase in grain acres overall, and I think this is a year that we might see sorghum overtake corn in acres planted,” he said. “There are really high cotton prices as well, and we’ve seen that be the crop option preference for a lot of producers in recent years as cotton prices got hot and grain prices were not.”
Grain sorghum demand and prices looking strong for Texas farmers
