Calil, Yuri writes in Southern Ag Today: Sorghum and corn prices move together, but not in lockstep (Figure 1A). For a sorghum producer, the spread between them can matter as much as the direction of corn prices. Since 1989, the monthly spread has ranged from a $1.72 discount to a $1.47 premium, and the largest swings have come recently (Figure 1B). In June 2026, sorghum averaged 17 cents above corn, yet USDA’s 2025/26 season-average estimates imply a 60-cent discount for the year. Relative prices can change that fast.
A sorghum grower faces two price risks. The first is the broad grain-price risk sorghum shares with corn, and corn futures have long served as the cross-hedge. The second is the risk that sorghum moves against corn, widening or narrowing the spread. Nothing has priced that one. On August 24, 2026, CME Group listed a contract that does (CME Group 2026a).
Export exposure is a major driver of spread moves. USDA estimates 2025/26 exports at 210 million bushels against 230 million bushels of domestic use, so exports account for about 48 percent of the two combined (Figure 2). For 2026/27, USDA projects 170 million bushels of exports and 140 million bushels of domestic use. The export share rises to 55 percent even though exports fall, because domestic use falls farther.
Historically, a higher export-to-domestic-use ratio has come with a stronger sorghum price relative to corn. From 2006/07 through 2024/25, moving that ratio from 1.0 to 2.0 was associated with a 27-cent-per-bushel improvement in the spread, and the relationship accounts for 57 percent of the variation in price (Figure 3). It is descriptive, not causal. Production, freight, trade policy, and feed demand all move both exports and domestic use. The 2025/26 estimate sits about 34 cents below the fitted line, a reminder that the ratio measures exposure rather than a complete pricing model.
Sorghum futures (MILO) trade as a differential to CBOT corn rather than as a flat price, the first sorghum contract since the Kansas City Board of Trade delisted its own in 1999. The two risks come apart. Corn futures manage the level. MILO manages the spread.
Consider a grower expecting to sell 50,000 bushels. Ten MILO contracts match that volume. A grower who fears sorghum will weaken relative to corn sells MILO. A 30-cent decline in the spread would cut the crop’s relative value by about $15,000, and a 30-cent decline in MILO would return about that much on the short position, before commissions and residual basis risk.
One caution about the word basis. MILO prices the sorghum-corn differential, not a local cash basis, and it settles to no cash index. Settlement is by physical delivery of sorghum to exchange-approved elevators in Kansas City, Wichita, Hutchinson, and Salina at a 6 to 12 cent discount per bushel (CME Group 2026b). There are no delivery point in the South. MILO will converge to an interior Kansas spread set by feeders and ethanol plants, while much of the region prices against Gulf export loadings. Whether the two track closely enough to hedge is an open question, and one that groups like the National Sorghum Producers has been raising.Liquidity will decide the rest. Producers with grain to sell are natural short hedgers. Feeders, ethanol plants, and other end users are natural longs. Merchandisers and exporters may take either side. If participation generates sufficient trading volume, open interest, and two-sided liquidity, sorghum gains a public price for a risk that has never had one. If it doesn’t, that poses a whole new set of risks for growers.
Panels: A. U.S. monthly average prices received by farmers. B. Sorghum price minus corn price. January 1989 through June 2026.
Marketing-year disappearance by use category, with exports as a share of total use; 2006/07–2026/27
Season-average sorghum premium/discount vs. exports divided by domestic use; Actual years used for the historical fit
Calil, Yuri. “A New Futures Contract for the Sorghum-Corn Spread.” Southern Ag Today
