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As trade spat grows, China hits U.S. sorghum imports with hefty deposit

Reuters  |  BEIJING/CHICAGO 

By and Tom Polansek

BEIJING/CHICAGO (Reuters) - 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.

and other U.S. companies will have to put a 178.6 percent deposit on the value of sorghum shipments to the country in what called a temporary measure, as the government continues to probe imports of the grain.

Traders said the deposit was high enough to bring U.S. imports to a halt and inflate prices of alternatives, such as barley. Sorghum is used in livestock feed and the fiery Chinese liquor baijiu.

"De facto, it stops all the trade," said Mike O'Dea, a U.S. for

The deposit on sorghum comes after had already threatened a tariff on that grain along with U.S. soybeans. purchased $12 billion worth of U.S. soybeans last year, making it the most valuable U.S. agricultural export to

The shipped 4.76 million tonnes of sorghum to in 2017, worth around $1.1 billion and making up the bulk of China's roughly 5 million tonnes of imports of the grain last year, according to Chinese customs data. Just last week, about 116,000 tonnes of U.S. sorghum was shipped from Texas, data showed on Monday. [GRA/CN]

The National Sorghum Producers, which represents U.S. farmers, maintained that the crop is not being dumped in

"Today's decision in reflects a broader trade fight in which U.S. sorghum farmers are the victim, not the cause," the group said.

China's move comes out of an anti-dumping investigation launched two months ago in retaliation for aggressive trade actions by Washington, including steep tariffs on solar panels and washing machines.

said it found the domestic industry was "substantially damaged" by U.S. sorghum imports being dumped into the country. It said it will issue a final ruling at a later date, but did not give a timeline.

Other companies likely to be affected by the deposits are Archer Daniels Midland, a top seller of U.S. sorghum into China, and

ADM and could not immediately be reached for comment. CHS had no immediate comment. Dreyfus declined comment.

SOARING FEED PRICES

Prices of soymeal and rapeseed meal used in animal feed jumped on the sorghum deposit as traders worried had penalties in store for other U.S.

Curbing imports of grains is considered one of the most powerful weapons can use in the trade row. farmers are a core of Trump's political base, and a surplus on the global grain market has growers worldwide struggling to find profitable markets. [nL1N1RB2HQ]

U.S. farm income has dropped by more than half since 2013, as years of massive harvests have depressed prices for staple crops. China's deposit would devastate Kansas, the top U.S. sorghum-producing state which supported Trump in the presidential election, said in a statement.

"Instead of targeting fairly traded U.S. exports, should immediately stop its unfair trading practices," he said.

Trade experts and farmers said Beijing's decision to limit imports of feed ingredients could boost costs for China's own vast livestock sector and might also inflate in the world's top consumer of the meat.

The scale of China's deposit devastated traders who had rushed to increase imports prior to the ruling. A with an international firm estimated more than 2 million of tonnes of sorghum were on the water heading for A source at another international trading house said the sector had expected a lower deposit, close to 35 percent.

Imports are usually high in April and May, and cargos en route are likely to get diverted to other points in Asia, traders said.

could buy some sorghum that had been destined for China, said Ken Morrison, a U.S. who worked for and now publishes a commodity newsletter. Sales of sorghum to that have not yet been shipped will likely be cancelled, he said.

Morrison said he could not imagine any companies paying China's sizable deposit.

"You're putting a lot of money at risk without any knowledge of what the end game will be," he said.

(Additional reporting by and in Beijing; Michael Hirtzer, Karen Pierog and P.J. Huffstutter in Chicago; and Gus Trompiz in Paris. Editing by and David Gregorio)

(Only the headline and picture of this report may have been reworked by the Business Standard staff; the rest of the content is auto-generated from a syndicated feed.)

First Published: Tue, April 17 2018. 23:27 IST
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