Market News & Headlines >> Rise in Chinese Corn Prices Boosts Sorghum Imports

A surge in Chinese corn prices, spurred partly by a government crackdown on overloading of trucks, has boosted demand for cheaper feed grains such as sorghum and barley from the U.S. and Australia. 

According to a report from Reuters News Service, Beijing launched the nationwide crackdown in late September, hitting supplies of corn which usually have to be transported around the country from northern growing regions. 

The introduction of subsidies for corn processors has also helped drive prices up along with wet weather that slowed harvest. Beijing has also been giving priority to coal freight on its railways amid surging prices for the fuel as winter starts to bite, according to energy market participants. 

Chinese corn prices have climbed 16% since the start of October. That has provided an unexpected boost to overseas suppliers of grains that can be used as alternatives to corn in animal feed, with traders reporting an uptick in shipments of sorghum from the United States and barley from Australia. 

"Inspections on overloading ... have limited overall transportation capacity and pushed up the cost (of local corn). Imported grains now have more price advantage," Cherry Zhang, an analyst with Shanghai JC Intelligence Co. Ltd, told Reuters. 

U.S. sorghum shipped to south China currently costs around 1,660 yuan ($240) per metric ton, said traders and analysts, compared with domestic corn arriving at Shenzhen's Shekou port for 2,040 yuan per ton. Feed barley is about 1,500 yuan per ton. 

China has booked more than 20 cargoes of U.S. sorghum since late October for arrival by February, said a trader in China, declining to be identified as he was not authorized to speak with media. That would amount to more than 1 million metric tons. While overall sorghum imports are still seen dropping in 2016/17 from previous years, suppliers had not expected a sudden jump in demand just after China had harvested a bumper corn crop.