China’s sudden decision to increase its imports of US sorghum, is not a one-time-thing, says US Grains Council’s (USGC) manager of global trade, Alvaro Cordero.
Unlike corn and wheat, sorghum is not subject to China's tariff rate quota. Tariffs are at 2% for food use and 9% for feed with a 13% value added tax.
According to Cordero, today's US sorghum price is trading at a $40 per metric ton price advantage over Australian origins. This provides a strong incentive for importers and end-users to purchase sorghum from the United States.
China is currently expecting a delivery of 600,000 metric tons. However some traders expect that to be significantly higher in the upcoming crop year.
Historically, China imports the majority of its sorghum from Australia and Myanmar for alcohol use. However, the increasing demand for coarse grains has prompted China, for the first time, to expand its feed rations to include sorghum.
The 2013/14 US sorghum crop is expected to significantly increase from the previous year's production to roughly 9.1 million tons. And with that exports are expected to double from 1.9 million tons in 2012/13 to 3.8 million tons in 2013/14.
"This new demand from China is critical to maintaining a healthy U.S. sorghum industry. Equally important is that the Chinese buyers properly use sorghum in their milling and rations. These two factors will enable future exports and increase consumption of sorghum as a feed component in China," Cordero said.
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