China, top buyer of grain feedstock, calls action 'individual, normal trade remedy'

China's announcement that it will investigate imports of sorghum - a type of grain feedstock - from the United States has sparked concerns from an organization representing sorghum farmers.

"US sorghum farmers do not dump our products into China or elsewhere, and our products are not unfairly subsidized. A fair proceeding will demonstrate these facts," Tim Lust, CEO of National Sorghum Producers, said in a statement released Monday.

China is the top buyer of US sorghum as well as soybeans, according to Reuters. Sorghum also is used in the Chinese liquor baijiu.

China's Ministry of Commerce plans to investigate whether US companies unfairly "dumped" sorghum on the Chinese market at a price lower than what it charges in the US, and whether the crop was subsidized.

"The surging amount of imports from the US since 2013 has dragged down market prices, damaging China's grain sorghum sector," Wang Hejun, chief of the Ministry of Commerce's trade remedy and investigation bureau, said in a statement Sunday on the agency's website.

Chinese Foreign Ministry spokesman Geng Shuang said the issue was an "individual, normal trade remedy investigation case".

The US shipped 4.76 million tons of sorghum to China in 2017, the bulk of China's roughly 5 million tons of imports of the grain that year and worth around $1.1 billion, Reuters reported, citing Chinese customs data.

"US sorghum farmers sell their product to our valued partners in China. We appreciate our deep and long-standing relationships within these buyers, and the feed and livestock industries in China," Lust said.

The top five states for sorghum production in 2017 were Kansas, Texas, Colorado, Oklahoma and Nebraska, according to Statista, a German statistics company with an office in New York.

Sorghum became a hot crop in China after China banned corn exports from the US late in 2013, according to Farm Futures. Corn exports resumed in 2014.

In 2015, US sorghum production surged to 597 million from 433 million bushels, according to the National Agricultural Statistics Service.

Nebraska, one of the nation's top producers of sorghum, saw its output jump to 23 million from 13 million bushels.

Since then, US production has fallen to 364 million bushels from 480 million in 2017. Nebraska's production in 2017 fell to 12 million bushels from 18 million.

The trade action comes a year after Beijing placed anti-dumping and anti-subsidy duties on imports of distiller's dried grains (DDGS) from the US, another product used as a feed ingredient, although it recently reduced a value-added tax on DDGS imports, Reuters reported.

"That could mean more than 5 million tons of sorghum would be replaced by corn, which pushed up corn prices," Meng Jinhui, an analyst with Shengda Futures, told Reuters.

To meet demands for animal feedstock, analysts and traders noted that Beijing might sell more corn from its large stockpile, estimated to total about 200 million tons, equivalent to one year of demand, according to Reuters.

Beijing recently called US President Donald Trump's tariffs on imported solar panels and washing machines an "abuse of trade remedy measures". Trump is also considering tariffs on imported steel and aluminum.

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