China’s nod to Brazilian sorghum may serve as test for US relations

China on Wednesday gave Brazil the go-ahead to begin exporting sorghum to Chinese buyers, a somewhat peculiar move since Brazil hardly exports the grain at all.

But the United States has a dominant presence in the Chinese sorghum market, which is why the development could help gauge U.S.-China trade relations going forward, especially from January when President-elect Donald Trump begins his second term.

U.S. agricultural exporters have lost Chinese business to Brazil over the last several years, and many market-watchers fear this could continue if Trump dials up trade tariffs on China.
Global production of sorghum, a grain used for both animal feed and liquor, pales compared with that of corn or wheat, though it may compete locally with these grains. For U.S. exporters, sorghum trade with China brought in more than $1 billion last year.

In other words, the United States is effectively growing sorghum for China. So where does Brazil come in?
Brazil’s sorghum crop has more than doubled in the last few years thanks to a boost in plantings, but the harvest remains about 40% smaller than the U.S. one. Further, its exports of the grain are currently negligible.

In Brazil, sorghum competes for area with the heavily exported second corn crop, so a Brazil-China sorghum relationship could help preserve the United States as top corn exporter. The center-west state of Goias produces about 40% of Brazil’s sorghum.

Source: Reuters

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