May 17, 2018 / 7:44 AM / 4 days ago

Japan buys 3 vessels of sorghum amid China-U.S. trade spat-sources

* Mitsubishi, with Mitsui, buys 1 cargo of U.S. sorghum-sources

* Other buyers include Zen-Noh, Toyota Tsusho and Itochu

* Japan buys 150,000-180,000 T of U.S. sorghum since mid-April

By Yuka Obayashi

TOKYO, May 17 (Reuters) - Japanese grain buyers have bought at least three vessels carrying a total of 150,000 to 180,000 tonnes of U.S. sorghum amid a trade spat between China and the United States, four industry sources told Reuters.

The cargoes are among roughly two dozen bought by China but left stranded after Beijing announced last month it would hit U.S. imports with a 178.6 percent deposit on the value of sorghum shipments, amid escalating trade tensions.

Trading firms have been scrambling to offload the cargoes to other countries, including Spain, which has so far purchased five cargoes, and Saudi Arabia.

Japanese trading houses Mitsubishi Corp and Mitsui & Co together bought one vessel which arrived at Kashima port, near Tokyo, late last month, said the sources who declined to be named due to sensitivity of the deals.

“The cargo has also stopped to unload some of the supply at Mizushima and Shibushi ports,” one of the sources said.

Other buyers include Zen-Noh, a Japanese farmer cooperative, and a pair of trading companies, Toyota Tsusho Corp and Itochu Corp, he and two other sources said.

“There may be another vessel coming to Japan if Marubeni Corp succeeds in striking a deal with a partner of another country,” the source added.

Mitsui, Zen-Noh, Itochu and Marubeni declined to comment. Mitsubishi and Toyota Tsusho were not immediately available for comment.

Data from the U.S. Department of Agriculture and Thomson Reuters Interactive Map shows the cargo offloaded at Kashima port in late April left Archer Daniel Midland Co’s Galveston elevator around March 7, while another vessel that arrived at Kashima port on May 16 departed Cargill’s Houston elevator at the end of March.

While some early offers for the distressed cargoes came in as low as $160-$170 per tonne just after China’s announcement, the Japanese buyers paid more than that but “still much lower than the pre-mid-April levels,” another source said.

Traders said Japanese firms had paid around $230 per tonne for sorghum before Beijing announced the deposit.

Japan’s sorghum imports have been declining since 2012 as cheaper alternatives took a greater share of livestock feed. Sorghum’s blending ratio slid to 2.3 percent in the 2016/17 financial year from 7.7 percent in 2012/13, said Commodity Intelligence, a Japanese commodity market research company.

In 2017/18, Japan imported about 365,830 tonnes of grain sorghum, down from 1.46 million tonnes in 2012/13, according to Japan’s trade data.

Japan’s increased sorghum purchases may mean reduced imports of other commonly used feed grains like wheat and corn or less use of locally-grown feed rice, a source said.

In the longer term, a lack of Chinese buyers could put pressure on sorghum prices, increasing its share of the Japanese feed market.

“Many believe that this is a one-off thing, but if the U.S. producers sell sorghum at cheaper prices than corn, Japanese feedmakers may buy more sorghum and buy less corn or wheat,” the source said.

Reporting by Yuka Obayashi; editing by Gavin Maguire and Richard Pullin

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