China shuts the gate on US sorghum imports​

China shuts gate on US sorghum imports


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China has announced a 179 per cent tariff on US sorghum, effectively halting imports in their tracks.

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China has imposed a massive import duty on US sorghum imports, providing another twist in the global market.

Early last week China announced a 179 per cent tariff on US sorghum, effectively halting imports in their tracks.

China has emerged has the dominant market for US sorghum in recent years, accounting for 4.3 million tonnes of shipments in 2017. Prices for US sorghum have tumbled in recent weeks after China announced an anti-dumping inquiry in February.

The move is just one part of the escalation in trade tensions between the world’s two largest economies where agricultural commodities have become the latest target.

Queensland sorghum bids moved sharply higher on the news of that China had effectively banned US sorghum imports. Sorghum prices finished last week $12-15 a tonne higher at $360 delivered Brisbane. Earlier in the week prices briefly reached $365 Brisbane before buying interest cooled in the later part of the week.

Central Queensland markets were $12 higher at $330 port. Central Queensland sorghum prices have now rallied by $75 a tonne in the past 12 weeks.

Wheat and barley prices in southern Queensland moved higher after the surge in sorghum values. Feed barley into the Darling Downs was $5 higher at $347 delivered while stock feed wheat was $9 higher at $355. Downs sorghum bids jumped by $15 to $347 delivered.

Traders are reporting at a significant volume of Australian sorghum has already been committed to China in recent months as buyers move to alternative supplies. It is not clear if last week’s kick in sorghum prices was a result of additional sales or nervous trade shorts stepping up efforts to secure grain.

There are reports that five cargoes of US sorghum that were already sailing to China are now looking for alternative homes. Discussion has circulated about Australia being a possible home for the distressed US sorghum cargoes although history doesn’t bode well for this option.

Australia imported several cargoes of US sorghum in 1998 after an intense drought though eastern Australia. At the time, strict quarantine procedures were imposed on the imports to minimise the risk of disease and pests. The sorghum had to be sourced from specific areas in the US that were lower risk of carrying several pests and diseases. It’s highly unlikely that the distressed US sorghum vessels would satisfy these strict quarantine procedures.

Isolated storms offered relief in some areas of southern Queensland last week, but farmers are desperate for general, soaking rain.

Eastern Australian grain markets are detaching themselves from global influences as local supplies become scarcer. Markets through southern NSW and Victoria also remain well supported as farmers wait for rain before contemplating additional sales. 

US grain markets were softer last week on improving weather and growing concerns over the escalating trade dispute with China on agricultural exports. CBOT wheat futures declined by 2pc on forecast rain for the parched HRW wheat crop and warmer forecasts for the spring wheat areas which would allow a general start to plantings.

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