O’Brien shares grains outlook at Sorghum Connections meeting 

Kansas State University and the Kansas Grain Sorghum Producers wrapped up their second series of meetings, Sorghum Connections, recently in Garden City, Kansas. 

Dan O’Brien, a K-State agricultural economist based in Colby, Kansas, looked at how domestic supplies are limiting crop prices, how tight world wheat supplies are and how weak U.S. wheat exports are hurting prices. He also considered marketing and crop production scenarios. 

“The markets generally aren’t worried about having adequate supplies. If they don’t buy today, they’re pretty sure those piles of grain are out there tomorrow,” O’Brien said. “So, it’s more of a buyer’s market at this time. That could change.” 

Right now there are adequate ingredients and oilseed supplies, he said, and that’s causing “no fear” in the minds of buyers. 

“It’s leading to moderating prices and generally, for the wheat market, [when] you look at where wheat prices are at, there’s nothing above $6 [a bushel] right now,” he said. 

In most cases, wheat is trading in the $5 to $5.15 a bushel range. 

A look at wheat

O’Brien sees a conundrum of the wheat markets because world supplies are at near historic lows, especially if the stocks to use percentage is examined. Minus China, it’s at about 18.9%. 

“We haven’t been that low since that 2007-2008 number. All that happened at that time,” he said. “We’ve got a very, very tight wheat market.” 

Other countries that grow wheat tend not to store it. Instead, they sell it. 

“They don’t have storage facilities like we do,” he said. “We have transportation, etc., because we have facilities, and we can actually finance stockpiles or inventories. We kind of found ourselves in the wheat market, as a residual storer in that. So, someday, when the wheat market does move higher, then, they’ll be glad we’ve got those reserves.” 

Grain sorghum’s window

With grain sorghum and other crops, he said, the seasonal trends in December and January and sometimes into April tend to move prices sideways to higher.  

“That’s what we normally have over the years, unless a geopolitical issue comes into play, or there’s a drought that suddenly springs up in a major way in competitive exporters,” he said. 

It’s a little dicey in February and early March when the prices begin to wane, and many who held onto grain wonder if they’ll see a decent price again. 

“We can almost lose hope during those times, but, once we break dormancy in wheat, that is a critical effect on the markets,” O’Brien said. “Once we begin field work in the spring and moving some in March, especially in April and May, we tend to get more volatility questions going into the market and tend to see prices into the higher side.” 

That’s all fine and dandy, but if you’re storing grain sorghum or haven’t even sold your crop, producers might wonder how long the wait will be to get a good price on their sorghum. The same can be said for corn.  

“Some of the positives that are happening in terms of underlying oil seed demand, particularly for soybean oil, generally, the idea that even though prices aren’t great, still the cost of production is relatively lower for oil, especially soybeans,” he said, although the market may be anticipating more U.S. and South American plantings in 2025. 

Wheat market uncertainty in the Black Sea, the European Union, Australia and other parts of the world will have more of an impact on price, especially with geopolitical issues, O’Brien said. Feed grains might have a different outcome, particularly in looking at South American countries. 

O’Brien mentioned trade issues, trade discussions, controversies and detentions that are yet to come, and the new presidential administration is not even in office yet. He suggested farmers wait and see, and vote with their planters. Typically, the seasonal transfer of grain sorghum in December to March is flat. 

“The issue [is] there is basis short in western Kansas,” he said. “They’re short somewhere else that affects us. Then the basis gains for cash prices can give us some guidance or some supporting off into April, May, June, so we’ll see.” 

O’Brien questioned how much value the futures market places on planting when in December.  

“Almost none,” he said. “They don’t pay much attention to it, but those things, those actual rallies, will emerge out here in March and April, and then we’ll see where it all goes.” 

Grain sorghum has a critically important position for Kansas, as well as around the nation—Oklahoma and Texas panhandles, southeast Colorado, and possibly through parts of the South and pockets in South Dakota. There were 6.3 million acres planted in the U.S. in 2024, with 5.275 million harvested. 

“We’ve had some higher years,” he said. “The 6.3 isn’t far off of and, actually, is a little bit on the higher side of where we’ve been since way back in 2015-16.” 

Yields should be considered, too, for those making planting decisions.  

Sorghum is most often priced off corn futures, and O’Brien said in his talk that on Dec. 5, 2024, the price was around $4.36 a bushel. Reference prices are often compared to 2014 to 2020. 

“The difference is that we’ve had production cost inflation since that,” he said. “So, you just stand back and look at the variability that we have in agricultural markets and just the amount of financial risk that follows these things.” 

With inflation and high input prices, coupled with a few other factors, according to O’Brien, it’s “pretty difficult” to have fixed cash rent. 

In southwest Kansas, around Garden City, O’Brien sees stronger grain sorghum demand and basis, as many producers would want the basis to be better, with livestock feeding and ethanol production helping the area.  

“It’s as strong out of these livestock feeding areas and some ethanol areas as anywhere in the state,” he said. “And it gets weaker going to the east and to the north.” 

Grain sorghum relies on corn exports, with the primary buyer being China. What influence does this have on the prospects for U.S. grain sorghum exports and if it will cause a disruption? At the end of November, the largest sorghum export to date took place, but O’Brien still remains cautious. 

“If you’re a major buyer out there in the world market, wondering what’s happening, you look at where we’re at seasonally, and we’re coming into the time frame now, and we tend to see a stronger pick up in sorghum exports,” he said. “I’ve been just really curious to see what happens about the next six weeks on sorghum exports.  

Kylene Scott can be reached at 620-227-1804 or [email protected].