Several ships carrying cargoes of sorghum from the United States to China have changed course since Beijing slapped hefty anti-dumping deposits on US imports of the grain, trade sources and a Reuters analysis of export and shipping data showed.
Sorghum is a niche animal feed and a tiny slice of the billions of dollars in exports at stake in the trade dispute between the world's two largest economies, which threatens to disrupt the flow of everything from steel to electronics.
The supply-chain pain felt by sorghum suppliers on the Pacific, Atlantic and Indian oceans underscores how quickly the mounting trade tensions between the US and China can impact the global agricultural sector, which has been reeling from low commodity prices amid a global grains glut.
Twenty ships carrying over 1.2 million tonnes of US sorghum are on the water, according to export inspections data from the USDA's Federal Grain Inspection Service. Of the armada, valued at more than $216 million, at least five changed course within hours of China's announcing tariffs on US sorghum imports on Tuesday, Reuters shipping data showed.
The five shipments, all headed for China when they were loaded at Texas Gulf Coast export terminals owned by grain merchants Cargill Inc or Archer Daniels Midland Co
would be liable for a hefty deposit to be paid on their value, which could make the loads unprofitable to deliver.
Beijing, which is probing US imports for damage to its domestic industry, announced Tuesday that grains handlers would have to put up a deposit of 178.6 percent of the value of the shipments. Traders said Cargill and ADM likely sold most of the grain in the cargoes that are on the water, traders said.
In a statement to Reuters on Thursday, Cargill confirmed it is the exporter. The company declined to confirm what is in the ships, the final destinations or the tonnage, nor name the customers. The company also declined to confirm why the ships stopped, or if they are being re-directed - but said that it does not have any responsibility for costs that may result.
ADM representatives declined to comment. The Panamanian-flagged ship called the N Bonanza, was churning its way northeast across the Indian Ocean earlier this week, carrying more than 67,000 tonnes of sorghum from ADM's elevator in Corpus Christi, Texas, according to Reuters shipping data.
Eleven hours after the anti-dumping deposits were announced, the ship stopped and then slowly tracked northwest.
The RB Eden, a vessel carrying 70,223 tonnes of sorghum loaded at the same ADM terminal, was headed east-northeast through the Indian Ocean off the coast of South Africa. It turned around. Hours later, the Stamford Eagle - hauling sorghum from Cargill's elevator in Houston - turned around off the western coast of Mexico.
At least two other vessels have also suddenly changed course: the Ocean Belt and Xing Xi Hai, both loaded at Cargill's terminal.
It is unclear where the vessels are now heading. For now, at least, two of the world's largest grain merchants are among those feeling the impact of the latest trade tussle with China, even if it is just a short-term issue, said Bill Densmore, senior director of corporate ratings at Fitch Ratings.
"For their overall trade businesses, this is not that substantial. But it's a warning," Densmore said. "If China really does start slapping tariffs on everything, like soybeans and corn, things could get really ugly, really fast." Beijing's move has heaped more strain on an already tense trade relationship between the world's two largest economies.
Traders said the deposit was high enough to bring US imports to a halt. Sorghum is used in livestock feed and the fiery Chinese liquor baijiu. Indeed, the news had an immediate impact on the global grains market: Bids for cargoes of Australian sorghum, which are not subject to the higher tariffs, spiked following the announcement, traders said.
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