Valley Grain Trader Concerned Over China's Sorghum Tariff
WESLACO – A Rio Grande Valley grain trader is concerned about China's motives with a massive new tariff it has placed on sorghum made in the U.S.
He says trade profits with the nation are growing here and this move could hurt prices.
It's the latest trade dispute between China and the U.S. China placed a new tariff of 179 percent on U.S. sorghum imports.
Octavio Garcia has been in the grain industry for 24 years. He says he remembers the first time China became a major player in the local sorghum or milo trade three years ago.
"They were very short on milo. They needed milo so they paid a premium, competing with Mexico," he explains.
Garcia says since then, he has seen China provide Valley producers needed business. Though the new tariff has not dropped sorghum prices yet, he believes it could in the next couple weeks.
"China are very well-documented people and they play with the American, futures, commodity market," says Garcia.
He says he's concerned that the trade disputes between China and the U.S. are going to harm his business and others in the Valley.
"This is just a war that I just hope they just keep it, they settled it up," he adds.
We reached out to Mark Welch, an agricultural economist with Texas A&M AgriLife Extension in College Station. He says trade disputes between the U.S. and China have a negative impact on different markets throughout our country.
He adds China is the world's top buyer of sorghum and Texas has great conditions to grow the crop.
"If you're a grain sorghum producer, these impacts are not small, in that one of the bright spots we've had in some of your agricultural enterprises with which you might choose if you look at growing grains or growing cotton or some other crops, the grain sorghum – because of its export potential, was one of the brighter spots," he explains.
Welch says in the coming days he will be paying attention to Texas sorghum prices to see if they fall.
He says another factor for Valley sorghum producers to consider is Australia’s increase in grain sorghum production. He anticipates Australia will try to capitalize on China's trade dispute with the U.S. by selling the massive nation its sorghum.
Garcia says he just wants China to settle the dispute with the U.S. so the Valley can have it grow as a customer.