(Bloomberg) -- China scrapped an anti-dumping and anti-subsidy probe into U.S. sorghum imports as the two countries seek to resolve a trade dispute.
Authorities found that the investigation “will increase costs for downstream breeding sector as well as living costs for a majority of consumers,” the ministry said. It cited a decline in pork prices and the country’s loss-making breeding sector as the reason for scrapping the probe.
China’s anti-dumping deposit roiled sorghum trading for the past month as buyers scrambled to re-sell more than 20 cargoes of U.S. grain. The end of the investigation comes after China offered President Donald Trump a $200 billion reduction in its annual trade surplus with the U.S. by increasing imports of American products and other steps, according to an administration official who spoke on the condition of anonymity. Other moves including restarting a review of Qualcomm Inc’s application to acquire NXP Semiconductors NV, may signal a more conciliatory stance between the countries.
“It is a gesture from the Chinese side,” said Yan Zhang, an analyst at Shanghai JC Intelligence Co. Some of the cargoes that were heading to China were resold at discounts of 30 percent to 40 percent, incurring huge losses for domestic companies, she said, adding China may also consider removing its tariff on U.S. distillers’ dried grains.
China imported about $957 million of U.S. sorghum in 2017 and purchases fell 15 percent in the first quarter of this year from a year earlier, according to customs data. Farmers had used the grain in animal feed in place of domestic corn, which climbed 20 percent last year. Pig prices in the world’s biggest pork consumer and producer have slumped more than 30 percent this year.
Agriculture traders will now be looking for clues on any further easing of tariffs. The Wall Street Journal reported this week that the U.S. and China are closing in on deal that would give ZTE Corp. a reprieve from sanctions in exchange for the Asian country removing tariffs on billions of dollars of U.S. agricultural products. China is the largest buyer of American soybeans in trade worth $14 billion last year and has been shunning U.S. supplies amid uncertainty over whether it will follow through with a planned 25 percent tariff.
While the move will please U.S. sorghum farmers, China’s soy buyers remain cautious, said Paul Burke, North Asia regional director for the U.S. Soybean Export Council. “I do not think importers will begin buying soybeans until there is a clear statement from the Chinese government that they will not impose a 25 percent duty,” he said in an email.
Soybean meal on the Dalian Commodity Exchange fell as much as 1.8 percent before trading 0.7 percent lower at 2,955 yuan ($464) a metric ton. Chinese corn futures fell as much as 0.9 percent before trading little changed. Soybeans on the Chicago Board of Trade rose 1 percent to $10.05 a bushel.
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