Some Chinese sorghum importers have asked the Chinese authorities to waive the hefty anti-dumping deposit imposed last week on US imports already at sea, as companies rushed to sell stranded China-bound cargoes that were on the water at big discounts. China’s Ministry of Commerce (MOFCOM) slapped a 178.6 percent deposit starting from April 18 on imports of sorghum from the US in a trade row between the world’s two biggest economies. Sorghum is a grain used in animal feed and to make liquor…Full Article: The Global Times Apr 2018

Key Point

  • One Chinese company appealed to the government to only impose the deposit penalty on US sorghum loaded after April 18th in order to safeguard shipments already out to sea. In addition, a consortium of Chinese companies met with officials from China’s Ministry of Commerce (MOFCOM) to discuss sorghum concessions.

ChinaAg Comments

  • Starting on 18 April 2018, US sorghum exporters would have to pay 178.6% deposit on China-bound shipments after preliminary investigation by China’s Ministry of Commerce (MOFCOM) found that the USA was dumping sorghum. In the wake of the announcement, at least three US sorghum shipments bound for China were re-purchased by Saudi Arabia.
  • In February 2018, China launched anti-dumping and anti-subsidy investigations into US sorghum after the US imposed (January 2018) additional tariffs on washing machines and solar panels. China’s Ministry of Commerce (MOFCOM) will carry out two investigations relating to sorghum. The first will examine possible US sorghum dumping that occurred from November 2016 to October 2017. The second will encompass imports that occurred from January 2013 to October 2017 in order to determine the negative impact imports had on China’s sorghum industry. The investigations should be finished by February 2019, but could extend to August 2019. During the same month, China’s Commerce Ministry announced it had removed anti-dumping and anti-subsidy duties on US white-feathered broiler chickens, though a bird flu-based import ban still remained in place.
  • In 2017, China imported 4.76 million MTs of sorghum from the USA.
  • In December 2017, mainland China lowered import tariffs for 187 tariff codes. These tariff codes included frozen Atlantic salmon and huchen (i.e. freshwater salmon) which were reduced from 10% to 5%, while tariffs for live/fresh/chilled rock shrimp and lobsters were reduced from 15% to 5%. Other tariff reductions include powdered or processed cheese (12% to 8%), dry coconuts (12% to 7%), fresh or dry unpeeled Brazil nuts (10 % to 7%), fresh or dry unpeeled cashews (20% to 7%), hydrolyzed milk protein formula (20% to 0%), amino acid formula (20% to 0%), lactose-free infant formula (20% to 0%), whisky (10% to 5%), in-shell macadamias (24% to 12%), pecans (24% to 7%), avocados (25% to 7%), dried cranberries (25% to 15%), meat sausages (15% to 8%), blue cheese (15% to 8%), and mineral water (20% to 10%).
  • In May 2017, China increased its outside tariff-rate quota (TRQ) on sugar. Prior to this, China had a 15% basic duty rate for up to 1.94 million MTs of imported sugar and an outside TRQ of 50%. The TRQ was designed to balance out the price difference between domestic and internationally traded sugar. For instance, in January 2014, the price gap between Chinese sugar in Kunming, Yunnan Province, and US sugar (ICE futures, export prices) was approximately USD 391 per MT. Unfortunately, this price gap has since expanded to roughly USD 664 per MT (as of June 2017). Recognizing that foreign sugar was more than 50% cheaper than domestically produced sugar, the Chinese government increased its outside TRQ to 95% (progressively declining to 90% and 85% in the following years) in hopes of curbing import demand for foreign sugar.
  • In 2016, Chinese imports of US sorghum decreased to 5.38 million MTs.
  • In June 2015, China announced that import tariffs would remained unchanged after the country’s 15-year World Trade Organization (WTO) transitional period.
  • From 2013 to 2015, Chinese imports of US sorghum increased from approximately 445,000 MTs to just over 9 million MTs. Texas was the largest exporter of US sorghum to China during this period.
  • From 2011 to 2015, Chinese buyers purchased more than 50,000 acres (~20,234 ha) worth of farmland from an real estate agent based in Bay City, Houston, Texas. In particular, in August 2015, a Chinese buyer inked a deal to purchase 5,000 acres (~2,023 ha) of Texan farmland for more than USD 20 million. The farmland will reportedly be used to grow and export sorghum for use in the production of liquor (e.g. baijiu). As of 2015, according to the US Grains Council, approximately 10% of Chinese sorghum imports are used to produce baijiu liquor.
  • From 2013 to 2014, Chinese sales of baijiu liquor rose 5.5%.
  • In 2013, China imported more than 1 million MTs of sorghum, with the bulk (760,980 MTs) arriving from Australia. The USA was the second largest supplier, but would surpass Australia in 2014.
  • In November 2013 China began rejecting US corn over reported concerns of GMO contamination (see MIR 162). The corn ban had a positive effect on Chinese sorghum imports (used as a substitute good).
  • In October 2013, according to the Executive Director of the Texas Grain Sorghum Board, China began importing US sorghum as a substitute for corn in its animal feed formulations.
  • In January 2013, China’s Ministry of Finance lowered import tariffs on 784 imported products in order to increase domestic consumption.
  • From 2010 to 2012, China’s sorghum imports increased slightly from 83,259 MTs and 86,602 MTs. Australia was the primary supplier, with Myanmar (Burma) acting as a small secondary supplier.
  • In December 2001, China became a member of the World Trade Organization (WTO). At the time, the USA negotiated a 3% across-the-board tariff for soybean imports.

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