Sorghum exports from the U.S. heading for China as of today are required to pay an anti-dump duty of 179%. This will effectively stop the trade of Sorghum between the two countries. The move from China’s Ministry of Commerce (MOFCOM) occurred mere hours after the U.S. banned technology exports to a Chinese telecommunications company. Reaction from the National Sorghum Producers (NSP) was swift, denying any dumping of U.S. Sorghum, offered a feeling of disappointment, but also cautious to tread lightly around it its Sorghum customers. Multiple sources had various highlights in their coverage of this news.
Successful Farming ran a Reuters story by Dominique Patton and Tom Polansek titled, “As Trade Spat Grows, China Hits U.S. Sorghum Imports with Hefty Deposit” highlighting the tit-for-tat nature exchange of trade tariffs and anti-dump measures between the two countries over the past month.
BEIJING/CHICAGO, April 17 (Reuters) – China will slap hefty anti-dumping deposits on imports of U.S. sorghum from Wednesday, the government said on Tuesday, a higher-than-expected charge on the grain used in livestock feed and the spirits industry, as trade tensions escalate between the world’s top two economies.
CHS Inc and other U.S. companies will have to put up a 178.6 percent deposit on the value of sorghum shipments to the country in what Beijing called a temporary measure, as the government continues to probe imports of the grain.
“De facto, it stops all the trade,” said Mike O’Dea, a U.S. trader for broker INTL FCStone.
The deposit on sorghum comes after Beijing had already threatened a tariff on the grain along with U.S. soybeans.
Alternative grains such a Barley are expected to fill the sorghum void in China to make livestock feed and the Chinese liquor baijiu.
AgWeb.com ran a Bloomberg story titled, “China Slaps US Sorghum with Steep Import Duty”, that expanded on the retaliatory nature of the announcement as trade tensions have risen between the two countries.
China began a probe into sorghum imports from the U.S. in early February, just weeks after U.S. President Donald Trump slapped tariffs on imported solar panels and washing machines. Tensions between the countries have since escalated after Trump ordered levies on steel and aluminum, with plans for more on products from China. The Asian nation, the largest buyer of American sorghum, has responded with tariffs of its own and potentially more to come.
“The rate is quite high and some buyers may have to cancel shipments,” said Li Qiang, chief analyst with Shanghai JC Intelligence Co.
China imported about 4.8 million metric tons of sorghum from the U.S. last year, worth about $957 million, according to customs data. Purchases in the first two months of 2018 were 11 percent lower than a year earlier.
As recently as last week, a shipment of U.S. sorghum was shipped from Texas, U.S. Department of Agriculture data showed on Monday.
“Market participants might translate the temporary deposit of sorghum as the start of a new round of trade disputes between China and the U.S., triggering concerns over soybeans,” said Monica Tu, an analyst at Shanghai JC Intelligence. China is the biggest buyer of U.S. soybeans.
Further coverage of the Soybean threat can be found in this Ag Nook’s piece titled, “Soybeans Not Out of China’s Crosshairs“.
A highly disappointed reaction from the National Sorghum Producers (NSP) was shared in a press release statement. Reading between the lines it seems that the NSP doesn’t believe the pretense for China’s action, dumping product into China has merit. Moreover, the tone isn’t inflammatory likely out of deliberate consideration to not add to the antagonistic nature of the situation.
“National Sorghum Producers is deeply disappointed in the preliminary antidumping determination issued today by China’s Ministry of Commerce (MOFCOM). U.S. sorghum is not being dumped in China, and U.S. sorghum producers and exporters have not caused any injury to China’s sorghum industry.
“National Sorghum Producers, alongside our producers, stakeholders and partners, has cooperated fully with China’s antidumping and countervailing duty investigations, including submitting several thousand pages of data demonstrating conclusively that U.S. sorghum is neither dumped nor causing any injury to China. None of this information appears to have been seriously considered or used in today’s preliminary determination, which is neither fair nor appropriate.
“We continue to greatly value our Chinese customers and what has been a win-win business relationship between U.S. sorghum producers and our Chinese partners. Today’s decision in China reflects a broader trade fight in which U.S. sorghum farmers are the victim, not the cause. And U.S. sorghum farmers should not be paying the price for this larger fight.
“Understanding the serious impact this preliminary decision will have on our farmers, NSP and our partners will continue to demonstrate U.S. sorghum farmers are not injuring China. We are evaluating all legal options moving forward.”
The trade relationship between the U.S. and China has been deteriorating for several months now. The anti-dumping action by China’s Ministry of Commerce is just another response in the tit-for-tat de facto trade war. A listing of Ag Nook coverage over the past weeks illustrates the deteriorating nature of the trade situation with China.
April 11th – Remarkable Trade Trouble
Unfortunately, today’s actions are real and have consequences for Sorghum growers in the U.S. Let’s hope this trade spat is resolved quickly as Agriculture is bearing the brunt of retaliation from China at this point.
Image Courtesy Quartz