February 5, 2018 / 2:18 AM / 5 months ago

China corn futures rise on dumping probe into U.S. sorghum imports

BEIJING (Reuters) - China’s corn futures climbed after Beijing launched an anti-dumping and anti-subsidy probe into U.S. imports of sorghum, an ingredient in livestock feed, spurring expectations that feed makers will turn to alternative sources of supply.

Surprised by an investigation that hadn’t been publicly requested by China’s feed industry, traders responded on Monday with plans to handle more demand for domestic corn, rather than risk penalties for importing sorghum from the largest foreign supplier of the grain.

At 12:09 p.m. (0409 GMT), the most-active corn futures on the Dalian Commodity Exchange were up 0.7 percent at 1,817 yuan ($288.53) per tonne, on track for their biggest daily rise in a month. Earlier they hit 1,824 yuan, their highest since Jan. 16.

Meng Jinhui, an analyst with Shengda Futures, said the move could see traders in China, the world’s largest grain consumer, restricting imports of sorghum from the United States in the next year.

“That could mean more than 5 million tonnes of sorghum would be replaced by corn, which pushed up corn prices,” the analyst said.

But analysts and traders noted Beijing might sell more corn from its vast stockpile to meet additional demand for the grain for use in animal feedstock. The government’s reserves are estimated to total about 200 million tonnes, equivalent to one year of demand.

SURPRISE MOVE

China launched the investigation on Sunday, a move expected to immediately hit demand for the upcoming U.S. sorghum crop. Imports from the United States are relatively low in volume, compared with China’s overall grain consumption for feed.

Still, some sorghum traders in China were surprised by Beijing’s move, which comes a year after China slapped hefty anti-dumping and anti-subsidy duties on imports of U.S. distillers dried grains (DDGS), another product used as a feed ingredient.

One trader said he would start buying domestic corn as an alternative, while another said he feared customers would cancel orders to avoid penalties in future.

“Most of our ships will arrive in February and March and won’t be affected much for now. But for shipments further out, profits will be affected,” said one trader, declining to be identified because he wasn’t authorized to discuss the matter with media.

China, the world’s largest agriculture market brought in 4.8 million tonnes of U.S. sorghum in 2017, compared with 32.9 million tonnes of U.S. soybeans.

Reporting by Hallie Gu and Josephine Mason; Editing by Kenneth Maxwell

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