Lower sorghum supplies to limit use – 1991-1992 stocks continue decline, prices strengthen – U.S. Dept. of Agriculture, Economic Research Service report
Although sorghum production in 1991 was marginally higher than a year ago, 1991/92 supplies are lower due to nearly 80 million bushels less in carryin stocks. While sorghum use is forecast down by 45 million bushels, this is not enough to keep stocks from falling to the lowest level since 1975/76.
The December 1, 1991, sorghum stocks of 449 million bushels were down 63 million from the same time a year ago. However, the lower supplies had little effect on usage in the September-November quarter, as total disappearance of 273 million bushels was off less than 10 million from the same quarter a year ago. Exports of 46 million bushels were down 10 million while domestic use edged up to 226 million.
If the first quarter pace of use is maintained, sorghum carryout stocks would fall below 100 million bushels. Strong demand from Mexico, importing sorghum at premium prices to corn for feeding purposes, is expected to push total 1991/92 exports to 200 million bushels. While this is over 30 million below the 1990/91 level, it is strong given the reduced supplies.
Pressure to reduce total use will also bear on the domestic feed sector, as tightening stocks and higher sorghum prices are likely to encourage switching to alternative feed sources. Therefore, the pace of sorghum feeding is expected to drop below last year for the remainder of the marketing year. As a result, total domestic use of sorghum is expected to decline over 15 million bushels to 405 million.
Sorghum Stocks Continue Decline
Combining domestic and export uses, sorghum disappearance for 1991/92 is forecast at 605 million bushels, down 45 million from 1990/91. However, with supplies down by nearly 70 million bushels, ending stocks will decline again. The 1991/1992 ending stocks of sorghum are projected at 117 million bushels, the lowest since 1975/76.
Farm Prices of Sorghum Strengthen
Through the first 5 months of the marketing period, sorghum prices received by farmers have averaged between 96 and 99 percent of corn prices. Based on feed-equivalent values and historical farm price relationships, farm sorghum prices would be expected to average about 93 percent of the farm price of corn. The forecast average price received by farmers for sorghum in 1991/92 is projected in a range between $2.25 and $2.55 per bushel, approximately 98 percent of the forecast corn farm price. [Tabular Data Omitted]
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