Sorghum’s rise as an alternative feedstock poses a threat to corn and DDGS

Sorghum’s rising availability and lower prices are putting pressure on corn demand and DDGS in animal feed, but its lower protein levels mean it won’t fully replace corn-based DDGS anytime soon, according to market participants.

Sorghum, also called milo, is mostly grown in Kansas and eastern Colorado, areas that don’t get as much rainfall as the typical Corn Belt, a source explained, noting that its advantage lies in its resilience during dry conditions. “It doesn’t use that much water, so it’s easier during crop season in those drier environments.”

Recent geopolitical tensions and trade disruptions have shifted sorghum’s path. Although China has historically been the primary destination for US sorghum exports, they have fallen 77.8% from 4.647 million mt to 1.031 million mt so far in the marketing year 2024/25 compared with the previous period, according to the latest data from the US Department of Agriculture.

“When the US-China relationship is normal, the majority of sorghum gets exported to China. This year, with the geopolitical environment, they’ve stepped away,” a sorghum market participant said. “When that happens, it works its way into the feed ration and the ethanol market.”

Some ethanol plants in sorghum-growing regions, such as Kansas and West Texas, have incorporated sorghum into their operations. While there is some DDGS that includes sorghum, another source noted that it doesn’t serve as a full substitute due to nutritional differences. “You can’t replace DDGS with sorghum; DDGS has a much higher protein concentration,” another source said.

This shift is also becoming evident in Mexico. A source in the agriculture sector said Mexican purchases of US sorghum are increasing as local production declines due to prolonged drought. “The spring-summer sorghum cycle in Mexico produced just 1.5 million/mt, when it usually yields more than 2.5 million,” he said.

US sorghum exports to Mexico have reached 150,800 mt so far in the MY 2024/25, a significant increase compared to just 5,000 mt during the previous MY, according to USDA data. “The domestic crop was so low that imports are now indispensable.”

The sorghum market participant added that Mexico is becoming a more notable buyer of US sorghum due to low local production. “There has been some going down that way. It hasn’t replaced the demand that China left, but there is some.”

On pricing, the source highlighted sorghum’s competitive edge. “Sorghum will make its way into the international market at a discount to corn. The only buyer that pays equivalent or higher value than corn is China.”

This pricing dynamic is driving sorghum’s entry into feed markets traditionally dominated by corn. “From a price perspective, it is more displacing corn than your other products, like soybean meal,” the same source added.

Looking ahead, the sorghum market source expects sorghum planting to decline due to price pressures and competition from corn. “Farmers are looking to plant other commodities, mainly corn. The supply is going to go down because in the last several years we had elevated prices, and now with sorghum being at such a discount, farmers shift.”

This shift could impact DDGS supply and prices, as corn remains the dominant feedstock for ethanol and DDGS production. “From the DDGS side, it’s been very tight right now,” the source added.

Sorghum’s growing role in both feed and fuel markets, even without fully replacing DDGS, reflects changing dynamics in US grain trade, as producers navigate shifting demand and international trade relationships.

Platts, part of S&P Global Commodity Insights, assessed CIF New Orleans for May at $202/st on May 23, and assessed the Chicago DDGS truck market at $167/st for the first June delivery period.

Tags: sorghum