Large mills in China have no corn quotas remaining for the year and are increasingly turning to U.S. sorghum. The turn is expected to boost U.S. sorghum prices over the next few months. Currently, U.S. sorghum prices are approximately $20 per ton higher than U.S. corn because of the increased purchases. Domestic corn in China costs US$65.35 more than importing sorghum from the U.S. because of Beijing’s stockpiling policy enacted to support prices and as a subsidy to farmers. Total sorghum purchases from China for 2013 are expected to hit 1 million tons. Sorghum is not subject to quota restrictions in China and buyers are only required to pay a 2% import tax and 13% value added tax on purchases however, f a mill imported corn above its quota it would be subject to a 65% import tax. If Beijing continues to stockpile corn in the coming years chief analyst with Xinhu Futures Co. Ltd. Shi Yan states that corn imports without quotas at a full tax rate of 65% may even be possible in the future.
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