CME Group to Launch Sorghum Futures on August 24

The CME Group has announced plans to launch sorghum futures on August 24, pending regulatory review. This decision is seen as a boost for Kansas grain sorghum growers, who have faced challenges in recent years due to a lack of balance and proportionality in the market.

Guy Allen, with the department of grain science at Kansas State University, said that the introduction of sorghum futures will help to change this by providing a price discovery process. He noted that while traditional Corn Belt crops are based on barges on the Illinois and Mississippi River system, western Corn Belt crops like sorghum rely on a rail-centric system.

The new contract will be based on U.S. No. 2 Grain Sorghum, with a standard 5,000-bushel contract size, and physical delivery through shipping certificates cleared via CME Clearing. Only U.S. quality 1 and 2 grain sorghum will qualify for contracts.

The introduction of sorghum futures is seen as an opportunity to help end users, who can now participate in the delivery process and take advantage of it with truck execution. This flexibility is particularly important for ethanol producers and feedlot operations in Kansas, who can load out smaller quantities.