China’s Feed Mills to Import U.S. Sorghum as Corn Quotas Run Out

Feed mills in China, the biggest meat producer, will buy more U.S. sorghum as a substitute for more expensive domestic corn as their government-issued quotas have been used up, COFCO Corp. said.

As much as 1.5 million metric tons of sorghum may be imported in the year starting Oct. 1, Fan Zhenyu, vice president of the corn division at the state-owned trading house, said yesterday at a conference in Nanchang, central China, without giving a figure for this year. Unlike corn, mills don’t need to use quotas to import sorghum, he said. China wasn’t a buyer of U.S. sorghum before this year, according to the U.S. Grains Council.

Livestock producers are eager to source cheaper U.S. grain to cut costs and as their corn import quotas have been used up for the calendar year, Fan said. China has stockpiled 30 million tons of corn, or 15 percent of last year’s harvest, to boost farming incomes and support domestic prices, Shang Qiangmin, director at the China National Grain & Oils Information Center, said at the same conference.

“Imports of anything that can be a substitute for corn, even barley, is very attractive to users,” Fan said.

The U.S. normally produces about 10 million tons of sorghum a year with Japan taking 2 million tons, he said. U.S. corn output will be about 352 million tons this year, according to the U.S. Department of Agriculture.

Sorghum Cost

Corn for December delivery on the Chicago Board of Trade was little changed at $4.57 a bushel at 2:19 p.m. Beijing time, or about $181 a ton. Sorghum, while not listed on the Chicago bourse, costs about $25 a ton more than U.S. corn to import, according to Fan. That’s still cheaper than corn on the Dalian Commodity Exchange, which traded at 2,324 yuan ($380) a ton.

While China is obligated to allow up to 7.2 million tons of corn to be imported each year as a commitment to the World Trade Organization, it only allots 2.88 million tons to private industry. State-owned COFCO and China Reserves Corp. import the remainder at the government’s discretion, Fan said.

Private companies are also buying the so-called dried distillers’ grains, or DDGS, a by-product of making corn-based ethanol, Fan said. Imports may total 3 million tons this year, he said. Last year’s imports totaled 2.4 million tons, according to researcher Boyar.cn.

Still, the new government headed by Premier Li Keqiang may begin to loosen control on imports to preserve land and water, said Fan, who projected shipments rising to 20 million tons a year by 2018. Last year’s imports were 5.2 million tons, customs data show.

China’s feed-grain imports may amount to about 10 million this year, including corn, sorghum and DDGS, Fan said.

To contact Bloomberg News staff for this story: William Bi in Beijing at wbi@bloomberg.net

To contact the editor responsible for this story: Brett Miller at bmiller30@bloomberg.net

Bloomberg reserves the right to edit or remove comments but is under no obligation to do so, or to explain individual moderation decisions.

Please enable JavaScript to view the comments powered by Disqus.