Last month was the first time the Chinese bought grain sorghum from the U.S. for feed use.
Bryan Lohmar, U.S. Grains Council Director in China, listed three factors for the purchase:
1.) A tight corn market in China;
2.) Restrictions on corn imports (due to a tariff-rate quota); and
3.) A very good U.S. corn and sorghum crop, causing prices for sorghum to be attractive to China's feed millers and livestock producers.
"Future opportunities for U.S. sorghum in the China market are very good, particularly if China continues to enforce the TRQ on corn," Lohmar said.
The TRQ policy on corn limits purchases from importers and end-users in China, even if the price was right.
"With the TRQ enforced, Chinese corn prices will likely remain well above world corn prices, and sorghum prices typically track corn prices," Lohmar said.
"Therefore, we expect there will be continued opportunities for U.S. sorghum exports to China."
According to the U.S. Department of Agriculture, China has outstanding sales of 197,000 metric tons (7.8 million bushels) of U.S. sorghum, with 58,000 tons (2.3 million tons) shipped. USDA reports outstanding sales of 498,000 tons (19.6 million bushels) for unknown destinations, which is widely speculated to be destined to China.
According to a Reuters report, "mills have already bought about 800,000 tons of U.S. sorghum for shipment in the 2013/14 year starting in September and total orders are likely to top 1 million tons, with prices still attractive."
Last week, the U.S. Grains Council hosted a team of United Sorghum Checkoff Program (USCP) representatives to China to assess China's potential as a future market of U.S. sorghum. While there, the team was able to familiarize the feed and livestock industry of the benefits sorghum feed has in pork, poultry and aquaculture production.
According to USGC manager of global trade Alvaro Cordero, who participated in the mission, "There is plenty of opportunity to expand sorghum production in the United States if a significant export market develops in China. We were able to help the China feed and livestock industry understand that the United States can be a reliable sorghum supplier and a reliable partner to help with their food security needs."
Next steps in the program will likely include an animal nutritionist to give seminars to Chinese nutritionists and managers in the swine industry on the benefits of using sorghum.
The Council will continue to actively monitor and engage in the market.