BEIJING, July 14 (Reuters) - China's sorghum imports are likely to fall as much as 30 percent in 2015/16 as buyers are reluctant to place fresh orders on expectations that Beijing may cut domestic corn prices which could wipe out margins for cheap imports, traders said.
China, the world's top buyer, imports sorghum largely from the U.S., the world's top exporter, as a substitute for domestic corn, prices for which are more than 30 percent higher than global prices due to support from Beijing's stockpile scheme.
Beijing is likely to cut government support prices for the new corn harvest due in September, which together with rail freight subsidies, may make domestic corn prices competitive against new U.S. sorghum, industry sources said. ID:nL3N0YY1CK
"We expect imports to drop 30 percent next year. Domestic corn prices are set to be low," said one trader with a big buyer in the southern province of Fujian. He referred to the U.S. Department of Agriculture (USDA) forecast of a record 9 million tonnes of sorghum imports for the year beginning September.
The forecast was in line with estimate by an official think-tank, the China National Grain and Oils Information Center (CNGOIC), which also expected the same volume of imports for current marketing year. ID:nL3N0YC1EU
"There are few new orders. Low domestic corn prices could narrow margins for imports," said another trader with a Chinese trading firm in the southern province of Guangdong.
Due to robust Chinese demand over recent months, U.S. sorghum was traded at much high premiums over U.S. corn 0#C: . New sorghum crop was quoted at about $270 per tonne (CIF), or 2,000 yuan per tonne after taxes, the traders said.
The high U.S. prices have led buyers to shift to barley instead, said the second trader.
Barley from Australia, Canada and France was quoted at about $240 CIF per tonne while Ukraine barley was even lower at $210 per tonne, said the trader.
China imported a record 1 million tonnes of sorghum in May, bringing total imports in the first five months to 4.27 million tonnes, up 51 percent on year, official customs data showed.
"Before the government clears its corn policy in autumn, buyers are simply gambling in placing new orders if any, while last year, they were 100 percent sure they were going to make money from imports," said one industry source.
($1 = 6.2080 yuan)