Where Will China Turn for Sorghum?

Posted on 04/18/2018 2:59 PM

China’s new deposit requirements of nearly 179% of the value of U.S. sorghum shipments to the country are expected to choke off all U.S. shipments to Beijing. Considering the U.S. supplied 95.2% of China’s total 5 MMT in sorghum buys in 2017, that left us wondering what its plans were for sorghum purchases going forward.

Once the U.S. is removed, there are only 1.3 MMT of sorghum left to export around the world for the 2017-18, according to USDA data analyzed by Doane Ag Research. Besides the U.S., China has sourced a small amount of sorghum from Australia and Southeast Asia. But history on this is limited… China bought very little sorghum prior to 2013-14.

Where will the U.S. ship its sorghum?

China also represents a huge market for the U.S., taking 4.76 MMT of U.S. shipments in 2017 that are expected to total 6.223 MMT for the 2017-18 marketing year. Prior to China’s ramping up of its sorghum buys from the U.S., Mexico was the main destination for U.S. shipments of the feed grain. The past two years, it has purchased a little over 500,000 MT of sorghum from the U.S.

Mexico’s sorghum crop is expected to climb slightly to 4.8 MMT, despite low prices and a disease threat, reports an attaché in the country. The post calls for the country to import just 250,000 MT of the grain in 2018-19.

But the attaché also made these comments: “It should be noted that several years ago, Mexico was the top customer of U.S. sorghum, buying more than the 50% of U.S. sorghum exports. However, currently U.S. shipments to Mexico represent less than 9% of U.S. exports, due to stronger demand from other countries (i.e., China), which triggered significant price increases. Trade sources estimate this trend could reverse if the international sorghum market conditions change, permitting more affordable prices.”

Most likely, any lost Chinese demand means more U.S. sorghum supplies that must be absorbed by the domestic feed market.

U.S. sorghum trade to date

U.S. export sales data indicate that just under 10% of U.S. sorghum export commitments (accumulated exports plus outstanding shipments) were yet to be shipped to the country for the week ended April 5 — 452,173 MT yet to be shipped out of export commitments totaling 4.656 MMT. The data indicates no export sales to China or any other country for the 2018-19 marketing year.

 

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