By Katie Micik
DTN Markets Editor
OMAHA (DTN) -- Grain sorghum's been a part of the mix on Kent Winter's south-central Kansas farm since his father first planted it to rotate with the wheat crop in 1957.
Now, he's planning to bump up his sorghum acreage as part of his defense against low commodity prices.
"We've got to take a defensive stance going into this season by trying to control and minimize expenses in a constructive way so that we don't harm our production potential," Winter told DTN. "Grain sorghum is by far my lowest-cost crop to put out."
He estimates it costs $79 per acre less to plant sorghum than corn, largely due to cheaper seed and lower fertilizer outlays. His estimate even includes increased herbicide costs to battle the sugarcane aphid.
Sorghum's gross income is likely to be $30 per acre less than corn's based on yield and new-crop prices at Winter's local elevator.
"It looks to me like a $49-an-acre advantage to grain sorghum when you throw it all together," he said.
Sorghum's basis relationship has returned to a more traditional pattern at $0.70 under December corn futures, unlike the past few years when sorghum basis soared above corn futures due to China's demand in the export market. That demand helped push sorghum acres up, from 5.45 million acres in 2011 to 8.46 ma in 2015.
REGIONAL COMPLEXION TO ACREAGE EXPANSION
Tim Lust, CEO of National Sorghum Producers, said he thinks sorghum acreage changes will vary depending on region this year. He thinks there's likely to be more acreage in Kansas and north. Farmers there planted much less winter wheat this year, with USDA's wheat seeding estimates coming in well below expectations at 36.6 ma, down 7% from the year before.
Wheat makes up about half of Winter's 1,500 acres historically, but with cash prices just over $4 per bushel and farmers' share of a loaf of bread falling to 6 cents, it's a tough crop to pencil out despite its low cost of production.
Lust thinks acres could decline in Texas where many farmers planted back-to-back crops to take advantage of high prices.
Wayne Cleveland, executive director of Texas Sorghum Producers, thinks acreage could gain in a few parts of the state. Many farmers in the Blacklands region struggled to get the wheat crop planted because of wet conditions and elected to take prevented planting from their crop insurance. He's heard that many of those farmers are contemplating planting a "wildcat," or uninsured, sorghum crop on those acres.
Don Bloss, who farms near Pawnee, Nebraska, said he thinks sorghum's a good option for his marginal ground. It helps break up the cycle of glyphosate-resistant weeds, yields well when water is short and expands the spring planting window.
"I think that acreage will stay the same, but it does depend on the planting season and prices," he said.
He thinks many farmers have made up their minds on what to plant, but if the corn planting window is narrowed by rain, more farmers could switch to sorghum.
"I think that certainly all growers are trying to figure out which crop is the most profitable, or unfortunately in some cases, which crop loses the least amount of money," Lust said. "I think it's one of those situations where input costs matter, [so] growers [are] looking at sorghum."
COST OF PRODUCTION
Winter's crunched the numbers on the costs to plant wheat, alfalfa, corn, soybeans and grain sorghum. Sorghum was the clear winner.
The two costs that made the biggest difference: seed and fertilizer. Sorghum seed costs $12 per acre, while corn seed costs $60 and soybean seed $45. Corn needs more nitrogen and phosphate than sorghum, averaging $60 to $65 per acre compared to sorghum's $33 per acre.
He figures he'll spend $26 per acre on herbicides for sorghum but $43 for corn.
"When you add all these up, it's approaching $100 difference," Winter said.
That doesn't include the additional expense in sorghum's calculation, $18 per acre for insecticides to control the sugarcane aphid.
Winter said aphids hit hard last summer, but Kansas State's Extension service planned timely educational programs that helped him get ahead of the pest. Winter used Bayer's Sivanto and it gave him "excellent control" over the pest.
Another insecticide, Dow's Transform, was effective against the aphid and was available for use last summer, but EPA cancelled its registration. The Texas Department of Agriculture has submitted an application to use Transform under Section 18 emergency use this growing season, and other states are in the process of making similar requests.
Once Winter factors in the insecticide costs, it's $79 per acre less to plant sorghum than corn.
"I've made the decision to up my sorghum acres, to plant more than I planned on, because I'm just not required to lay out as much money," Winter said.
POTENTIAL FOR PLC PAYOUT
Farmers with sorghum base acres who chose price loss coverage (PLC) under the most recent farm bill could also be looking at a sizeable payment. Kansas State University estimates the marketing year average price for sorghum at $3.35 per bushel, but the reference price for sorghum is set at $3.95, higher than corn.
Bloss, who also chairs the National Sorghum Producers' legislative committee, said his farm grew a lot of sorghum in the 1980s when base acres were set. He said it was a big legislative win to get a reference price above that of corn, and it was made possible because there's substantially fewer base acres.
"I took my old base and updated by yield on sorghum," he said. "Corn went into ARC-County. We don't often come up short on a crop of sorghum. Price is the big issue there."
Lust said a potential PLC payment will be significant support to growers this year. About 66% of sorghum base acres were enrolled in PLC.
"We would always rather have the price, but in years when we don't, we expect that to be an extra $82 million to U.S. growers that they're certainly going to need this year," he said.
Winter excluded a potential PLC payment from his decision making on what to plant this year because programs have been decoupled from planted acreage.
"That's gravy, that's a cherry on top if it materializes," he said. "At this point when I make decisions, I'm looking hard at the economics and head-to-head comparisons versus corn."
Katie Micik can be reached at katie.mick@dtn.com
Follow her on Twitter @KatieMDTN
(SK/AG/BAS)
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