China retreats from U.S. sorghum probe amid global market havoc
* Move brings relief to Chinese importers, U.S. farmers
* Seen as goodwill gesture while China vice premier in
* China launched probe in February, imposed duties in April
* ADM has warned dispute will hurt trading profits
(Adds comments from ADM, Kansas governor and U.S. trade group,
and U.S. market reaction)
By Hallie Gu and Tom Polansek
BEIJING/CHICAGO, May 18 (Reuters) - China dropped its
anti-dumping probe into imports of U.S. sorghum on Friday,
beating a hasty retreat from a dispute that wreaked havoc across
the global grain market and raised concerns about rising costs
and financial damage at home.
The move was seen as a goodwill concession as Chinese Vice
Premier Liu He was in Washington for talks aimed at resolving
trade tensions between the world's two largest economies.
The end of the investigation came as a huge relief to U.S.
sorghum growers, who saw sales to the top grain buyer come to a
halt and prices plummet over the past month.
But U.S. farmers and traders said they remained worried that
China might still implement restrictions and tariffs on other
agricultural products such as soybeans, corn and cotton.
Tensions between the nations have climbed. U.S. President
Donald Trump has threatened to impose up to $150 billion in
punitive tariffs to lower trade deficits and combat what he
calls Beijing's misappropriation of American technology.
China has threatened equal retaliation, including tariffs on
some of its largest U.S. imports including aircraft, soybeans
China's Commerce Ministry said in a statement the
investigation into sorghum, used in animal feed and liquor, had
revealed that anti-dumping and anti-subsidies penalties would
inflate living costs for Chinese consumers.
China's investigation, launched in early February, showed
its top trading partner how much financial pain it could inflict
on U.S. farmers, analysts said. Last month, Beijing imposed
hefty anti-dumping deposits on imports of the grain.
"China has taught a lesson to the United States and showed
how it can hurt U.S. exports," said Ole Houe, director of
advisory services at brokerage IKON Commodities in Sydney.
"Now they are showing goodwill by halting its anti-dumping
investigation into sorghum imports, but it is a cheap way of
showing goodwill as the U.S. does not have much sorghum left to
export. The next U.S. sorghum crop will be harvested in August."
Agricultural products are considered one of the most
powerful weapons in Beijing's arsenal because a strike against
farm exports to China would hurt farmers in U.S. Midwestern
states that backed Trump in the 2016 presidential election.
The United States accounts for more than 90 percent of total
sorghum shipments to China, with the American imports worth just
over $1 billion last year.
Most of Archer Daniels Midland Co's sorghum
shipments to China have already been diverted and resold to
other markets, said Jackie Anderson, a spokeswoman for the
The company warned earlier this month it would take a $30
million hit to trading profit due to the dispute.
"We are continuing to evaluate the impact of these
developments on our business going forward," Anderson said on
HOPES FOR TRADE AGREEMENT
The National Sorghum Producers, a U.S. industry trade group,
submitted thousands of pages of information to China's
authorities to show that the United States was not dumping
sorghum, the group's Chairman Don Bloss said.
Bloss said he hoped the end of the probe reflects an easing
of trade tensions with Beijing.
The deposit scheme stopped trade and disrupted supply chains
worldwide, with almost two dozen ships carrying U.S. sorghum
stranded at sea as merchants and buyers scrambled to sell
cargoes at big discounts elsewhere.
Frantic Chinese importers lobbied the government to rethink
the plan amid worries that higher costs would be passed onto
feedmakers and eventually push retail meat prices higher.
Corn, soybean and soymeal futures
in China fell on the news of the end of the probe as concerns
eased that feedmakers would need to find alternative
In the United States, corn futures jumped as traders
said the move signaled that supplies of livestock feed would
tighten. U.S. soybean futures rose on hopes that the end
of the probe is a step toward a broader trade agreement.
Dropping the probe "is an important sign of progress in our
efforts to resolve trade tension with China," Kansas Governor
Jeff Colyer said in a statement.
China's Commerce ministry said it would return the deposits
on sorghum imports it collected, bringing relief to Chinese
buyers who still had cargoes stuck at ports.
"This is great news! We are now saved," said a private
sorghum trader who had more than 600 tonnes of U.S. sorghum
stranded at a Chinese port. "We will clear our goods immediately
The government would not, however, compensate traders for
losses linked to reselling or demurrage, said Cherry Zhang,
analyst at Shanghai JC Intelligence Co Ltd.
"The damage has been done, and mainly to the domestic
buyer," Zhang said.
The United States shipped 4.76 million tonnes of sorghum to
China in 2017, worth around $1.1 billion and making up the bulk
of China's roughly 5 million tonnes of imports of the grain last
year, according to Chinese customs data.
(Reporting by Tony Munroe, Josephine Mason and Hallie Gu in
Beijing, and P.J. Huffstutter and Tom Polansek in Chicago;
Additional reporting by Naveen Thukral in SINGAPORE; Editing by
Tom Hogue, James Dalgleish and Will Dunham)
First Published: 2018-05-18 06:41:28
Updated 2018-05-18 23:21:26
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