By Jamie Martin
CME Group has revealed plans to introduce Sorghum Basis Futures, adding a new risk-management option for the agricultural industry. The contract is expected to launch on August 24, 2026, pending regulatory review.
Sorghum is a versatile crop widely used in animal feed, export markets, and ethanol production. Although sorghum prices generally follow corn trends over time, market conditions can occasionally cause significant differences between the values of the two grains.
The new futures contract focuses on the basis, or price difference, between sorghum and corn. This will give producers, grain companies, exporters, and end users a dedicated tool to manage basis risk and respond to changing market conditions.
Market analysts note that strong export demand can push sorghum prices above corn values, while abundant supplies may cause sorghum to trade at a discount. These fluctuations can influence purchasing decisions across the feed and biofuel industries.
CME Group believes the contract will improve market efficiency by helping participants better manage volatility in the sorghum-to-corn spread. Recent years have seen major swings between premiums and discounts, creating uncertainty for businesses that rely on sorghum markets.
"While sorghum prices tend to track corn closely over extended macroeconomic cycles, geopolitical events and regional supply shifts can disrupt that relationship," said John Ricci, Managing Director and Global Head of Agricultural Products, CME Group.
He added, "In recent years, the sorghum-to-corn cash spread has experienced considerable volatility, swinging from sharp premiums to steep discounts. The Sorghum futures contract will provide market participants a precise instrument to hedge that basis risk."
The contract will use physical delivery and will be supported by grain elevators in Kansas, the largest sorghum-producing state in the country. Deliveries can be made through truck or rail transportation using an existing agricultural delivery network.
The announcement follows continued growth in agricultural derivatives trading. CME Group reported record average daily volume of 2.1 million agricultural contracts in the second quarter of 2026. Corn futures and options also achieved record open interest of 4.1 million contracts during the quarter.
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