China's Import Demand Analysis of Grain Sorghum from USA

Sorghum is an ancient grain which is the most commonly used feed grain for livestock. The United States is the world's second largest producer and top exporter of grain sorghum. It is grown in more than a dozen states across the country and sorghum belt runs from South Dakota to Southern Texas. China, one of the fastest growing economy, is the major destination of U.S. grain sorghum. This research study examines the determinants of an import demand function for U.S. sorghum in China considering the macroeconomic variables such as Gross Domestic Products (GDP) and exchange rates (Yen-US$). The time series data from 1991-2020 were used for this analysis. This paper follows the single equation import demand model developed by Thursday and Thursday (1984). China's import demand for sorghum was determined as a function of derived demand of sorghum which is constructed as with the grain sorghum import price, domestic corn price, exchange rate, the country's GDP, and number of livestock production. In 2021, The United States produced about 448 million bushels of grain sorghum and exported 267.2 million bushes to China as chief importer (USDA ERS, 2021). These statistics indicates, U.S. sorghum export market is largely depending on China's sorghum import demand. It is projected that China will continue this import volume while sorghum is low cost feed grain and is substitute for high price corn. The results of this study will be an important sorghum trade analysis and recommendation for world sorghum trading countries, especially for China to implement favorable import policies for US sorghum. On the other hand, this analysis will also be beneficial for US sorghum producers in assessing their export potential not only to China's livestock industry but also other export markets.