Feed companies in Guangdong Province, one of China’s largest meat producing and consuming provinces, imported 400,000 metric tons of sorghum in January, replacing one-third of its typical 1.2 mmt per month corn usage.
“Sorghum has become a hot import grain because it has no tariff quota and no GMO issues,” said Zhonghua Wang, a market analyst in Beijing.
China’s sorghum purchases soared after the corn trade collapsed when a trait China hadn’t yet approved for import, MIR 162, showed up in its ports. The government has since approved the trait, but corn trade hasn’t resumed its previous pace.According to the China Bureau of Statistics, sorghum imports surged to more than 4.2 million metric tons in 2013-14, from less than 1 mmt the year prior. Another statistics service, the China National Grain and Oil Information Center, expects 2014-15 imports to hit 6.4 mmt, and companies have already purchased sorghum for 2015-16 delivery.
Most of the importing companies are located in south China. Of the top 10 importers, seven are from south China companies, two are national in scope and one is in Shandong Province on the country’s east coast. The largest importer, Xiamen C&D Inc., is located in Fujian Province and imported 1.1 mmt of sorghum last year.Feed companies in Guangdong Province normally use 1.2 mmt of corn each month. The 400,000 mt of sorghum in January offset about one-third of typical corn use, Wang said.
“Most of the corn consumed in Guangdong province is coming from northeast China and north China’s production region,” he said. China’s state reserve continues to buy corn in that region, driving up prices and limiting supplies to the south China feed markets.
Wang said there are some limitations to sorghum substitution. “Sorghum can only be used for hog and dairy feed, not for poultry feed. Corn is still the better choice for poultry farmers.”
Sorghum grains are too small for China’s poultry feed processing facilities to crush, and chickens can’t digest whole sorghum. Also, farmers prefer corn for chickens because it gives broilers better feather colors and layers’ eggs yellower yolks.
“When the Chinese government has less intervention in the corn market and corn price eventually gets closer to market price, sorghum demand will decrease,” Wang said.
Currently, China’s sorghum imports come primarily from the U.S. and Australia. U.S. sorghum is used in feed, while Australian sorghum is used to make liquor called baiju.
Wang added that China may import from a third country this year. “China approved Argentina sorghum imports last November. Argentina sorghum will be competitive with U.S. sorghum as it’s also for feed use. Plus, it is harvested in a different season than the U.S. crop.”
Argentina produced 3.6 mmt of sorghum last year and exported 3 mmt of it.
“We are expecting China will import more sorghum in the next few years, but the total volume will be limited in the long run,” especially after China resumes corn imports, Wang said.