Sorghum: Trading
No futures of its own, so traders borrow maize's
No futures of its own, so traders borrow maize's What this tab covers How and where it is bought and sold: who buys and sells, exchanges and benchmarks, contract types, the big trading houses and how prices are discovered.Sorghum has no active futures contract. US sorghum is usually priced as a basis to CBOT maize futures, so hedgers use maize contracts. Physical sales to China, Mexico and Japan go through grain merchants and cooperatives at Gulf and Pacific ports. In 1974 the Big Five merchants handled 90% of Australia's grain sorghum exports (Morgan, pdf p. 327). Argentina put sorghum marketing under a state board in 1973, alongside wheat and maize (Morgan, pdf p. 343). Local markets in Africa and India are informal.
Where it is bought (buyers)
- Chinese feed mills and baijiu distillers buy US Gulf and Australian cargoes, mostly through COFCO and other importers
- Mexico buys rail and truck shipments from Texas and Kansas for feed; Japan and the EU (Spain) buy smaller volumes
- In India, households and food processors buy jowar in APMC mandis in Maharashtra and Karnataka; state agencies buy at MSP
Where it is sold (sellers)
- US farmers sell to country elevators and exporters (Cargill, ADM, Bunge, LDC); exports leave from Gulf and Texas ports
- Australian growers sell to bulk handlers and traders out of Queensland and New South Wales ports
- Argentina and Brazil sell surplus after domestic feed use
Exchanges and benchmarks
| Venue | Contract | Notes |
|---|---|---|
| CBOT (CME Group) | Corn futures, 5,000 bushels | no liquid sorghum futures exist; US sorghum is priced and hedged as a basis to CBOT corn |
| Dalian Commodity Exchange | Corn futures (yuan per tonne) | domestic Chinese maize price that sets the value of imported sorghum in feed |
| India: APMC mandis and MSP | physical spot trade | no jowar futures on NCDEX or MCX; the MSP acts as the floor in procurement states |
Contract types
- FOB US Gulf or Texas cargoes priced as a premium or discount to CBOT corn futures
- Farmer cash contracts and forward sales against corn futures
- State procurement at MSP in India
Top trading houses
- Cargill
- ADM
- Bunge
- Louis Dreyfus Company
- COFCO International
How prices are discovered
- CBOT corn futures plus Gulf sorghum basis bids (USDA AMS reports)
- World Bank Pink Sheet sorghum series (discontinued after August 2020)
- India: mandi modal prices on Agmarknet and the MSP