U.S. farmers and the agriculture section in general has been caught in the middle of the trade tensions between China and the United States. Sorghum growers have felt the repercussions of this strained trading relationship just last month. However, on Friday U.S. sorghum growers received some welcomed news. China ended the anti-dumping probe of sorghum imports from the U.S. This post will highlight coverage of this news and impact on U.S. sorghum growers.
Sorghum Anti-dumping Probe Ends
Since April, sorghum heading from the U.S. to China was required to pay a 179% tariff. This tariff effectively halted sorghum trading between the countries. Thus, ships were re-routed and new buyers were found at steep discounts. Yet, on Friday an announcement was made that China would drop its anti-dumping probe. AgUpdate ran a bloomberg story titled, “China Scraps Probe into Near $1 Billion U.S. sorghum Imports”. The announcement was made as the two sides met in an effort to resolve growing trade tension.
Sorghum Announcement Reaction
Regarding the announcement, Yan Zhang, an analyst at Shanghai JC Intelligence Co., said
“It is a gesture from the Chinese side, Some of the cargoes that were heading to China were resold at discounts of 30 percent to 40 percent, incurring huge losses for domestic companies.”
Chinese imports of U.S. sorghum had fallen 15% in the first quarter. Concurrently, the announcement may not signal a change in soybean trade policy.
While the move will please U.S. sorghum farmers, China’s soy buyers remain cautious, said Paul Burke, North Asia regional director for the U.S. Soybean Export Council. “I do not think importers will begin buying soybeans until there is a clear statement from the Chinese government that they will not impose a 25 percent duty,” he said.
Successful Farming carried an article from Reuters about this announcement. The Reuters piece agreed that the move was a goodwill gesture. The gesture was an opening to broader trade talks between the two countries.
In a credibility saving statement,
China’s Commerce Ministry said in a statement the investigation into sorghum, used in animal feed and liquor, had revealed that anti-dumping and anti-subsidies penalties would inflate living costs for Chinese consumers.
Meanwhile the clear intent of the message was delivered.
“China has taught a lesson to the United States and showed how it can hurt U.S. exports,” said Ole Houe, director of advisory services at brokerage IKON Commodities in Sydney.
Governor of Kansas, the largest sorghum producing state had this to say about the announcement.
Dropping the probe “is an important sign of progress in our efforts to resolve trade tension with China.”
Sorghum China Trade Impact
On the one hand this is terrific news for U.S sorghum growers as the China market is very significant. On the other hand this gesture rings hollow at the present time as the U.S. doesn’t have much sorghum left to export. However, the benefit of accessing the Chinese market is likely to be felt later this summer. Thus, assuming mother nature does her part and trade tensions do not escalate, the new sorghum crop may reach the Chinese market.
Image Courtesy Dr.Axe