Utrecht (The Netherlands) ‒ Since late 2013 and starting from almost scratch, China has been experiencing an explosive growth of sorghum and feed barley imports. But it’s questionable as to whether the country will be a consistent long-term buyer, says Rabobank in its latest report.
There are lingering concerns that the Chinese government will take more concrete actions to limit the importation of these alternative feed grains, in order to boost domestic corn consumption and to absorb the massive overhang in state reserves. Due to the substantial risk of Chinese feed grain price declines, protective trade policies and currency turmoil, Rabobank expects China’s import of sorghum and feed barley to see a significant decline in the coming years.
Worst case scenario
In a worst-case scenario, the aggregate import volume could drop by up to 50 percent. Therefore, traders should implement several mitigation measures.
Upcoming reform policies on Chinese corn will also have a long-term impact on imports. Given its dominant position in global feed grain trading, China’s slowing demand will have consequences for exporting countries. A proportion of the sorghum and feed barley will need to find a different outlet in the world market, and it will be exported to other traditional destinations. Meanwhile, a larger volume needs to be used in the country of production. In addition, the ongoing price pressure on these feed grains will result in lower planted acreage in following seasons.
More information is given in the Rabobank Food and Agriculture report on ‘China’s appetite for sorghum and feed barley’.