Key Takeaways
- CME Group plans to launch Sorghum basis futures, with trading set to begin August 24, 2026, pending regulatory review.
- The contract will track the price difference between sorghum and corn, two grains used in animal feed and ethanol production.
- Contracts will be physically delivered by truck or rail from a network of Kansas elevators, using CME Group's existing Kansas City Hard Red Winter Wheat delivery system.
- Kansas is the largest sorghum-producing state in the U.S., making it a natural hub for the new contract's delivery network.
- CME Group said the sorghum-to-corn spread has swung between sharp premiums and steep discounts in recent years, driven partly by international demand.
CME Group Sets August Launch for Sorghum Futures
CME Group plans to launch Sorghum basis futures, with trading expected to begin August 24, 2026, pending regulatory review. The new contract is aimed at grain buyers, sellers, and processors who need a way to manage price risk tied to sorghum specifically, rather than relying only on corn futures as a proxy.
How the New Contract Will Work
The basis contract will track the price difference between sorghum and corn, two grains used both in animal feed rations and as ethanol feedstock. Contracts will be physically delivered by truck or rail from a network of elevators in Kansas, using the delivery infrastructure already built for CME Group's Kansas City Hard Red Winter Wheat contract.
Why the Sorghum-Corn Spread Matters
When sorghum trades at a premium to corn, it typically signals strong international demand pulling values higher. When the spread turns to a steep discount, domestic buyers tend to shift feed rations toward the cheaper grain. CME Group said that spread has swung considerably between premiums and discounts in recent years.
CME Group Taps Kansas's Grain Network
Kansas is the largest sorghum-producing state in the country, making it a natural fit for the new contract's delivery network. By building the sorghum contract on top of its existing wheat delivery system, CME Group is extending infrastructure it already operates rather than standing up a separate one.
Sorghum is used both as a feed grain for livestock and as a feedstock for ethanol production, and it is also a major U.S. export crop, with China among the largest buyers in recent years. A dedicated basis futures contract gives grain elevators, feed manufacturers, and exporters a tool to hedge sorghum price risk directly, rather than approximating it through corn futures alone.
