China to Slow Sorghum Purchases
China’s sorghum purchases for the month of June reached a record high of 1.09 million tons, and imports for the months of July and August are expected to each total an additional 1 million tons, bringing China’s sorghum imports for the 2014/15 marketing year higher than its corn imports.
However, analysts are forecasting that China’s sorghum imports will fall by 30% next year. With China’s high domestic corn prices and restrictions on corn imports designed to force companies to purchase domestically and reduce stockpiles, buyers have instead been opting for alternative feed grain without tariffs, such as sorghum and barley. In response, expectations are that Beijing will make changes to its corn pricing policy to increase corb usage, and thus affecting sorghum demand.
"China's sorghum import increase was because of the government policy in corn. Logically, any change in the corn market will have a big impact on sorghum imports," said Hongwei Dong, analyst at Yongan Futures.
The possibility that China will soon give up its corn floor price policy is causing reactions on the market, where corn prices are falling by between four and eight cents per day. Although Beijing has not made any official announcements on the matter, industry traders speculate that Beijing will either shift corn to a target price subsidy in line with cotton and soybeans, or will lower the floor price for the next crop and then eliminate it for the following crop.