China tightens checks on U.S. sorghum imports -traders

Thu Aug 21, 2014 3:01am EDT

* China stepping up checks on U.S. sorghum cargoes -traders

* Could slash imports of the corn-substitute

* Has already rejected more than 1 mln T of U.S. corn

By Niu Shuping and Dominique Patton

BEIJING, Aug 21 (Reuters) - Chinese authorities are stepping up checks on U.S. cargoes of sorghum, traders said, potentially curbing shipments from the world's largest exporter of the corn-substitute.

Four traders with direct knowledge of the matter said the country's quarantine office last month asked local authorities to tighten checks of sorghum and barley, looking for impurities such as pesticide residues and heavy metals.

A quarantine bureau spokesman declined to make immediate comment.

The move comes after China has already rejected more than 1 million tonnes of U.S. corn due to the presence of genetically modified strain that has not been approved by Beijing.

Chinese feed mills have increasingly been turning to U.S. sorghum as a cheap substitute for domestic corn <0#DCC:>, which has seen prices inflated as Beijing supports the country's rural population.

"There are worries in the market, which should reduce imports of sorghum in later months," said Zhang Yan, an analyst at Shanghai JC Intelligence Co. Ltd (JCI).

JCI cut its forecast for sorghum imports to 1.6 million tonnes for the 2014/15 marketing year, down from 3.9 million tonnes predicted earlier.

China is the world's largest importer of U.S. sorghum, with its feed mills buying almost all their sorghum from the country.

"Shipments already booked or on the way to China may have no problem, but bookings after the notice may face trouble," said another industry source, who declined to be named as he is not authorised to speak with media.

"Some of the major buyers have already been informed of strict checks," said the source.

Sorghum is traditionally used to make alcohol in China but use in animal feed surged last year as the industry sought to diversify ingredient supplies and replace expensive domestic corn.

Some big buyers contacted by Reuters said they were adopting a 'wait-and-see' approach to any further sorghum purchases.

"It is still unclear if quarantine authorities are testing every shipment. They could really make things go crazy as they did for DDGS," said a trader with a large buyer in south China.

China has stopped issuing import permits and demands certification that imported distillers' grains (DDGs), a by-product of corn-based ethanol, do not contain the MIR 162 GMO strain.

Another large buyer in the southern province of Guangdong said it had stopped placing new orders but declined to say why.

China's quarantine authority has also asked ports to step up screening of alfalfa imports this month after cargoes of hay from three U.S. suppliers were found to contain unapproved GMO varieties, according to a notice on a government website.

U.S. alfalfa imports have seen rapid growth in recent years to meet demand from China's fast expanding dairy herd.

(Editing by Joseph Radford)