August 24, 2007

High demand hikes US sorghum prices

US sorghum prices have increased due to surging demand from some EU countries, with sorghum trading at a premium to corn on the international market, the US Grains Council (USGC) said on August 22.

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 tonnes, mostly in Hungary, said Kurt Shultz, USGC director for the Mediterranean and Africa.

Shultz said Spain has imported 588,100 tonnes (23.1 million bushels) of sorghum since Sept. 1, 2006, through Aug. 9, 2007,  ten times more that it imported from the same period a year ago.

Italy, which did not import sorghum from the US in 2005/06, has also imported the grain at 38,400 tonnes (1.5 million bushels) from the US since the marketing year which began in September. The USGC first introduced sorghum to Italy more than three decades ago.

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, according to Dale Artho, USGC chairman and a sorghum grower from Texas. Speaking from the Council's sixth International Biotechnology Conference, Artho noted EU restrictions on biotechnology have largely eliminated US corn and corn products as options for the feed industry, further worsening the situation. The EU imported approximately 3.1 million tonnes of corn co-products in 2005 prior to the EU's embargo on biotech products.

Shultz noted the EU grain market will remain volatile until they raise their ending stocks despite some foreseen obstacles.