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WEDNESDAY, JULY 22, 2026 | SPECIAL REPORT & ANALYSIS
MARKET PERSPECTIVE | SORGHUM FUTURES
NSP Welcomes Sorghum Futures Plan but Presses CME on Contract Design
France says delivery points, liquidity and producer safeguards will determine whether the new contract becomes an effective risk-management tool
Analysis · July 22, 2026
National Sorghum Producers (NSP) Chair Amy France said CME Group’s planned sorghum futures contract could provide farmers and grain companies with a long-awaited tool for managing sorghum-specific price risk, but warned that the contract’s proposed delivery structure may not adequately reflect how the crop is produced, marketed and transported.
CME plans to begin trading the contract Aug. 24, pending regulatory review. Rather than establishing a completely independent sorghum price, the contract would trade as the premium or discount of sorghum relative to CBOT corn futures. CME says the structure is intended to help market participants manage volatility in the sorghum-corn price relationship.
France, a Kansas farmer, issued the following statement:
“Today’s announcement of a sorghum futures contract should be an exciting development for our industry. However, our responsibility is to look beyond the announcement and ensure the proposed product works for sorghum farmers. Significant questions remain.
“Growers, through sorghum organizations like NSP, provided recommendations for more appropriate delivery points and other safeguards to support contract liquidity, but those recommendations are not reflected in the proposed CME product, which relies on a wheat-market model.
“As implementation moves forward, we will continue advocating for improvements, seeking answers to outstanding questions and ensuring producers have the information they need to understand the product and its potential impact.”
How the Proposed Contract Would Work
The physically delivered contract would cover 5,000 bushels and trade under the product code MILO. Prices would be quoted in cents per bushel as a differential to corn futures. U.S. No. 2 sorghum would be deliverable at par, while U.S. No. 1 would receive a 1.5-cent-per-bushel premium.
Delivery would be made through elevators approved for CME’s Kansas City hard red winter wheat contract, with truck or rail loadout available. Initial contract months are expected to include December 2026 and March, May, July, September and December 2027.
The contract is designed primarily to hedge sorghum basis risk — the sometimes-volatile premium or discount between sorghum and corn. A stronger sorghum premium can signal export or specialty-market demand, while a widening discount can encourage livestock feeders or ethanol plants to substitute sorghum for corn.
However, a producer seeking to establish an outright sorghum price would generally have to manage two positions: the appropriate corn futures contract and the sorghum differential contract. That structure could help the new product tap into the much larger and more liquid corn market, but it also makes producer education, spread-order functionality and reliable execution especially important.
Why Delivery Points Matter
France’s statement does not identify the specific alternative delivery points or safeguards NSP recommended. Those details will be important because a futures contract’s delivery territory helps determine which portion of the physical market anchors the futures price.
CME’s use of the Kansas City wheat delivery system gives the contract access to an established network of Kansas grain elevators and transportation infrastructure. Kansas is the nation’s dominant sorghum-producing state, making it a logical center for the contract. But sorghum’s commercial flows do not always mirror wheat movements. Sorghum frequently moves by truck to regional feedlots and ethanol plants and by rail or barge toward export terminals, particularly along the Gulf Coast.
A delivery system that is too concentrated — or whose storage, transportation and loadout costs do not reflect the broader cash market — could allow the futures price to diverge from bids received by growers outside the delivery territory. That would weaken the contract’s value as a hedge even if trading volume initially appears adequate.
A 2026 Kansas State University analysis supported a Kansas-based delivery structure modeled on the hard red winter wheat contract but emphasized the need for truck loadout, dependable transportation rules, suitable grain-quality standards and the ability to execute corn-sorghum, calendar and outright-price transactions efficiently.
The history of sorghum futures reinforces France’s concerns. Kansas City previously offered a grain sorghum contract, but it was delisted in 1999 after trading volume deteriorated and delivery and convergence problems limited its usefulness.
U.S. Sorghum Remains a Concentrated but Important Market
U.S. farmers planted an estimated 6.28 million acres of sorghum in 2026, down 5.4% from 2025, with 5.49 million acres expected to be harvested. USDA projects production at approximately 380 million bushels. Kansas alone is forecast to harvest about 2.5 million acres — nearly half of the national harvested area and substantially more than second-ranked Texas.
Sorghum competes directly with corn in livestock feed and ethanol production but also serves food, pet-food and export markets. Its drought tolerance makes it particularly important in the central and southern Plains, where limited rainfall and declining groundwater supplies can make corn production more difficult or expensive.
Domestic ethanol demand has recently become a more important source of support. USDA estimates food, seed and industrial use at 120 million bushels for 2025-26, reflecting particularly strong sorghum use by ethanol plants. That category is projected at 105 million bushels for 2026-27. USDA currently forecasts an average 2026-27 farm price of $4.10 per bushel for sorghum, compared with $4.40 for corn.
Exports remain the market’s largest source of both opportunity and volatility. USDA forecasts 2025-26 U.S. sorghum exports at 220 million bushels, with China accounting for 74% of shipments from September 2025 through May 2026. For 2026-27, the U.S. is projected to export 5.2 million metric tons — more than 55% of forecast global sorghum trade — while China is expected to account for roughly 80% of world imports.
That concentration means Chinese buying decisions, tariffs, trade relations and feed-grain substitution can rapidly change the sorghum premium to corn. Those are precisely the risks the proposed futures contract is intended to isolate.
Analysis: Liquidity Will Be the Decisive Test
The contract has the potential to improve price discovery, encourage elevators to offer more forward contracts and give growers a direct way to protect a favorable sorghum premium. It could be particularly valuable during periods when export demand causes sorghum to separate sharply from corn prices.
But contract design alone will not guarantee success. Commercial grain companies, exporters, ethanol plants, livestock feeders and producers must generate enough two-way trading to create dependable bids, narrow spreads and sufficient open interest. Without sustained commercial participation, growers could find it expensive to enter or exit positions, especially in deferred contract months.
Bottom line: The key measures of success will be whether futures converge with physical sorghum values at delivery; whether elevators throughout major production areas can use the contract to offer competitive forward bids; whether delivery economics reflect both truck and rail movements; and whether trading volume remains strong after the initial launch period.
France’s statement therefore reflects cautious support rather than opposition. NSP recognizes the potential value of a sorghum-specific contract but is signaling that the industry should not measure success merely by whether trading begins Aug. 24. The real test will be whether the contract becomes liquid, transparent and closely connected to the prices farmers receive.
