By MATTHEW D. ERNST Missouri Correspondent ST. LOUIS, Mo. — The U.S. sorghum industry could see a significant increase in 2018 plantings, as stronger-than-expected exports are providing price support, and a U.S. EPA proposal could help boost biodiesel production from sorghum oil, an ethanol co-product. Sorghum exports increased in November and December 2017, with China and Japan being the two main buyers. “This strong foreign export demand for U.S. grain sorghum has raised domestic prices and is causing a projected shifting of usage away from U.S. domestic livestock feeding and ethanol production,” said Dan O’Brien, Kansas State University economist, in a KSU market analysis. Sorghum is riding the global buying frenzy for inexpensive coarse feed grains. China’s large sorghum purchases in late 2017 spurred the USDA to add 50 million bushels to its export estimate. That is sorghum that would be diverted from U.S. ethanol production, and stronger-than-expected cash prices resulted. Late-December cash bids for sorghum in central and western Kansas were about 30-40 cents per bushel more than corn, a higher spread than many sorghum producers anticipated at harvest. Producers could look to increase sorghum acreage in 2018, especially if strong exports continue to undergird cash prices this winter. But sorghum profit margins are still tight. “Just as with U.S. corn, wheat and soybeans, current cash bids for grain sorghum are below full economic cost of production in most instances,” said O’Brien. He suggests 2018 sorghum production could be as much as 30 percent higher than the latest USDA projections, which assume a 1 million-acre increase in plantings from 2017. Higher sorghum production would welcome biofuel demand – and a proposed rule announced by the EPA on Dec. 27 could help pave the way for more biodiesel generated from sorghum oil, a co-product of dry milling sorghum ethanol production. The proposed rule states that “using distillers sorghum oil as feedstock results in no significant agricultural sector greenhouse gas emissions,” according to the EPA Notice for Comment, published in the Federal Register. The proposed rule also states that biodiesel and heating oil produced from distillers sorghum oil, according to a specific process, meets EPA requirements for advanced biofuel and biomass-based diesel. The EPA is seeking public comments on the proposed rule through Jan. 28. The proposal is already applauded by the U.S. sorghum and ethanol industries. “After almost four years of work by National Sorghum Producers (NSP) industry partners and staff, we are excited to see this proposed rule in the Federal Register, putting us one step closer to sorghum oil filling biodiesel production needs,” said John Duff, NSP strategic business director. “This is significant positive news for sorghum producers and ethanol plants in the Sorghum Belt as it provides more opportunities and better returns producing ethanol from sorghum.” The NSP and biofuels industry have long advocated for EPA to develop a pathway for sorghum-based biodiesel to generate renewable identification numbers (RINs), which can help ethanol producer profitability. About one-third of the U.S. grain sorghum crop is used in ethanol production, according to USDA and NSP estimates. To learn more about how to submit a comment by Jan. 28, visit www.regulations.gov/document?D=EPA-HQ-OAR-2017-0655-0001 |
