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Chinese Tariffs Mean Discounted Sorghum for U.S. Ethanol, Livestock Industries

The ongoing trade dispute between the U.S. and China, and the resulting tariffs imposed by China on U.S. grains, has proven to be a windfall of sorts for the U.S. ethanol and livestock industries.

As the largest buyer of U.S. sorghum, the exit of Chinese buyers from the market is widely felt and has led to prices falling to 90 percent of the costs of corn. This, in turn, has led ethanol producers in Texas and Kansas to switch their feedstock from corn to sorghum - buying enough of the grain to last through July.

Conestoga Energy Partners stated it immediately bought between nine and 10 million bushels of sorghum - all canceled orders from China that were enroute to the Texas coast for export.

Meanwhile, 20 bulk cargoes of U.S. sorghum underway toward China had to be diverted when a deposit fee of 178.6 percent of the value of the cargo was imposed by Beijing, leading ADM to threaten legal action against China. ADM states it is also now selling its sorghum to U.S. ethanol producers.

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