Corn set to edge out sorghum as China signals subsidy probe

China’s Ministry of Commerce has initiated an investigation of US sorghum imports under its Anti-Subsidy Regulations, the ministry announced Sunday.

The move could see market players switch to supplying the safer option of corn to meet some of the needs currently covered by sorghum, market sources said Monday.

Under Article 18 of its regulation, ‘the Ministry of Commerce may decide to investigate any subsidy and potential damage caused by the subsidy with sufficient evidence without any anti-subsidy investigation application,’ according to a translation.

Citing an unspecified accusation, the ministry said that some US sorghum imported into China had been subsidised and subsequently sold below the competitive market price, thus lowering domestic prices in China.

That had then bolstered demand and fired additional supply for the grain, which can be used as a livestock feed, biofuel feedstock or alcohol – with the ministry’s statement noting that corn could be used as a substitute ingredient.

The government will now contact domestic producers, importers and foreign exporters with a survey within ten days of the investigation’s start on February 4.

Failure to cooperate may bring penalties.

The US is the world’s biggest supplier of sorghum to China and is set to produce 364 million bushels, with 260 million bushels expected to be exported in the 2017/18 marketing year.

China is also wrestling with substantial corn stockpiles, which some have estimated to be in excess of 200 million mt.

"Yes, 100%, if they limit sorghum imports it could have a knock on effect for corn demand," one Europe-based corn trader said. 

The government has pledged to tackle stock levels by aggressively cutting back on planted area and bolstering other uses such as ethanol.

Recently the US also announced that it would be imposing tariffs on Chinese-made solar panels.