China will import over a sixth of world’s sorghum in 2015
Over a sixth of the world’s sorghum will be shipped to China this year as the Asian superpower’s new-found hunger for the grain continues to grow, according to market intelligence firm CCM.
China imported over a million tonnes of sorghum during May alone, according to data from China Customs, and imports have risen every month since February.
Based on current rates, CCM predicts that China will import over ten million tonnes of sorghum in 2015, more than a sixth of the 59.4 million tonnes the International Grain Council forecasts will be grown worldwide during the 2014/2015 growing season.
Feed industry turns to sorghum as substitute for corn
This spike in Chinese demand is being driven mainly by the country's feed industry, which is increasingly turning to sorghum as a cheaper substitute for corn. Over 80% of the sorghum imported to China is used to produce feed, according to China's Ministry of Commerce.
Stockpiling large quantities of corn
Sorghum's chief advantage lies in its relative cheapness. The Chinese government's policy of stockpiling large quantities of corn has driven up domestic corn prices to USD393/t, almost double prices in the US. However, China also imposes a hefty 65% tariff on corn imports that raises the price of imported corn to USD380/t.
At an average price of just USD284/t, sorghum represents an attractive alternative for Chinese manufacturers.
Tendency to cause constipation
Though its lower nutritional value and tendency to cause constipation make sorghum unsuitable to completely replace corn, insiders in China's feed industry disclosed to CCM that Chinese manufacturers will typically choose sorghum over corn if the price difference rises over RMB150-200/t (USD24.5-32.7/t). With the price difference currently more than triple that figure and no import quota for sorghum currently in place in China, it is possible that imports could rise even further in the coming months.
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