context: Sorghum serves multiple purposes in the PRC, primarily used as animal feed in the pig, poultry and aquaculture sectors. It is also crucial in the production of baijiu, the PRC's popular traditional spirit. In 2023, the PRC bought some 5.2 million tonnes of sorghum from abroad.
On 20 November 2024, the PRC approved sorghum imports from Brazil, a surprising decision given Brazil's limited history of exporting this grain. This move could serve as a barometer for US–PRC relations, particularly with the return of Trump to the presidency next year.
In recent years, Brazilian ag exporters have gained market share in the PRC at the expense of their US counterparts. Following Trump's initiation of a trade war in 2018, Brazil replaced the US as the PRC's top soybean supplier and subsequently became the largest corn supplier as well. Analysts are concerned that if Trump increases tariffs on PRC goods after potentially taking office in 2025, a similar scenario could unfold for sorghum.
The global sorghum market is dominated by the US, which is the world's largest exporter, projected to account for 56 percent of global exports in the 2024/25 season. Australia follows as the second-largest exporter at 23 percent.
On the import side, the PRC leads the world, expected to account for 88 percent of global sorghum imports. Last year, US sorghum exports to the PRC exceeded US$1 bn, with a staggering 75 percent of US production destined for export. In the 2023/24 season, an impressive 94 percent of US sorghum exports went to the PRC, indicating that American farmers are heavily reliant on PRC demand.
Brazil has seen its sorghum production more than double in recent years. However, its output still lags about 40 percent behind that of the US. Currently, Brazilian sorghum exports are negligible. It's important to note that Brazilian sorghum competes with second-crop corn for farmland. If Brazil expands its sorghum exports to the PRC, it could lead to a reduction in second-crop corn planting, which may ultimately benefit US corn exports. Goiás state accounts for approximately 40 percent of Brazil's total sorghum production.
In the US, sorghum is primarily grown in the Southern Plains, with Kansas producing 53 percent and Texas contributing 24 percent of national output. Kansas is considered a swing planting state and has seen farmers shift towards corn after the trade war began in 2018. The new PRC–Brazil sorghum agreement could significantly alter planting decisions in the US, potentially leading to more acreage dedicated to corn, soybeans and wheat.
The US sorghum industry has previously faced disruptions following the trade tensions that began in 2018. As a result of these latest developments, traders are increasingly concerned about the outlook for US sorghum exports in 2025 and beyond.