US fears over China clampdown on sorghum

The surging US sorghum trade with China could face a clampdown from authorities in Beijing, who are trying to reduce domestic grain inventories, US agricultural officials have warned.

The Chinese government had "begun to pay close attention to the rapid increase in sorghum imports, and some policy makers reportedly believe these imports make it harder for the government to dispose of its large corn stocks", according to the latest China grains report from the Beijing bureau of the US Department of Agriculture.

China's sorghum imports jumped in the year to September 2014, increasing more than sixfold to 4.2m tonnes from the previous year and are forecast to double to 8.5m tonnes in the 12 months to 2015, with the bulk of the commodity coming from the US.

The report from Beijing warned that the numbers could change due to stricter testing of sorghum shipments.

"Import officials have recently begun to enhance inspections, and traders are voicing concern that the government may be getting ready to take more concerted action to limit imports," it said.

The surge in demand for sorghum comes as the Chinese government's grain purchases under its agricultural support programme have pushed up domestic prices for corn.

Feed mills have been importing cheaper alternatives, including sorghum and barley, which are also not subject to official import quotas.

Grain analysts note that the imports of sorghum and barley have diverted demand from Chinese domestic corn, despite Beijing's efforts to reduce its increasing supply glut.

The demand has meant higher prices for sorghum and barley at a time when grain prices have been depressed due to plentiful crops.

Sorghum prices are up more than 14 per cent since the end of 2014 to $246 a tonne in April, while barley has risen 17 per cent to $205 a tonne, according to World Bank data.

The USDA is forecasting China's sorghum imports to rise to 9m tonnes in the year to September 2016, while barley imports are expected to reach 7m tonnes, up almost threefold from 2.5m tonnes five years before.

Although importers have already signed contracts for large volumes of sorghum to be delivered this year, it warned that "farmers and traders may want to take measures to mitigate risk of trade disruptions and related price".

According to a report posted on the website of China's quarantine authority, inspectors in Shenzhen have detected a fungus that causes "grapevine blight" in a 49,000 tonne shipment of US sorghum.

The pathogen is said to have a wide range of possible hosts and could threaten the country's plants and devastate the agriculture, warned the article.

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