OMAHA (DTN) -- The U.S. sorghum industry will see relief after China's Ministry of Commerce announced Friday it would stop the investigation into anti-dumping and countervailing measures against U.S. sorghum exports to that country.
The announcement removes the 178.6% anti-dumping tariff China slapped on U.S. sorghum exactly a month ago.
Chinese officials cited that, over the course of the investigation, the commerce ministry (known as MOFCOM) heard from a lot of downstream users and determined that the case "would increase the costs of the downstream aquaculture industry." That, in turn, would increase the costs for Chinese consumers "and would not be in the public interest."
Chinese officials also said the price of domestic pork in China was falling and restrictions on imported sorghum would increase feed costs on pork producers as well.
"National Sorghum Producers is gratified by this announcement and this quick result, which is a win for China and a win for America's sorghum farmers," said Don Bloss, a Nebraska farmer and chairman of National Sorghum Producers. "We agree that it is in China's public interest to terminate these cases, and we look forward to deepening our trade ties with our Chinese partners and customers."
The sorghum marketing year officially runs from Sept. 1 to Aug. 31. China has been the overwhelming buyer of sorghum, buying 4.32 million metric tons (170 million bushels) this marketing year, which is up from 3.18 mmt (125 mb) over the same stretch of time for the 2016-17 crop year. Yet, as of now, China has not made any buys for the upcoming market year.
Over the course of the past month, more than 20 ships headed to China have been diverted and the grain sold back into the U.S. market or elsewhere internationally.
"It is fair to say it was a significant amount of grain" that had to find new purchasers, said Tim Lust, CEO of National Sorghum Producers.
On a larger scale, Friday's announcement could reflect the initial thawing of icy relations between the U.S. and China over an array of tariff-and-investigation announcements between the two countries. Sorghum is still listed among the $16 billion-plus in commodities that could face up to a 25% tariff increase as China waits for the outcome of the U.S. "301 investigation" that would determine if China has been involved with the theft of intellectual property and discriminatory practices against U.S. products. China listed the agricultural products as likely candidates for retaliation, depending on how the U.S. takes action.
"We know Chinese leadership is still meeting with our leadership at a very high level today and this is a much bigger issue," Lust said. "But certainly from our standpoint the win for our farmers and for our customers is the 178% tariff is gone and we're back to a situation that is similar to where we have been in the past."
Harvest will start within the next month in southern Texas so Lust expects that by July there should be some new-crop sales showing up with USDA.
"I do believe we will be in a new crop situation before we see a lot of sales, but that is just normal," Lust said.
Chris Clayton can be reached at Chris.Clayton@dtn.com
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