3 grain ships turn away from Chinese ports; U.S.-China trade bat - KTTC Rochester, Austin, Mason City News, Weather and Sports

3 grain ships turn away from Chinese ports; U.S.-China trade battle threatening farmers

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ROCHESTER, Minn. (KTTC) -

Just as Minnesota farmers are trying to plant corn and soybeans, the escalating trade dispute between the U.S. and China is threatening the financial success of the crop.

It may have started with President Trump's threat to put a tariff on steel and aluminum, but the counterpunch from Beijing has been on grain shipments from America destined for Chinese ports. 

Minnesota and Iowa corn and soybeans move by truck to grain elevators that dot the countryside and, as the life-blood of the local economy, need a place to go next.  Typically the corn and beans are shipped by rail to ports like Duluth-Superior, Tacoma, Washington and Houston, Texas.  From there, international companies like Archer-Daniels-Midland and Minnesota-based Cargill arrange to ship the commodities to overseas buyers.  It can take 600 or more rail cars loaded with grain to fill one ocean-going grain ship.  The same is true for sorghum.

This, of course, is a simplified narrative of an extraordinarily complex story. Consider that China purchased $19.6-billion of U.S. agricultural products last year, much of that, soybeans going for livestock feed, as the diet continues to change for China's growing middle class.  

Cargill has seen the light of this emerging market for American bounty--and in recent years has acquired and invested in six soybean processing plants in China.  It stands to benefit from an uninterrupted export-import business, and a prolonged trade dispute could do immense harm to its business model.  

Reuters reports that last Thursday, three ships loaded with American sorghum were diverted from Chinese ports to Japan and South Korea after China demanded deposits of 178.6 percent of the cargo value in its own "anti-dumping" move.  Citing Thomson Reuters Eikon ship tracking data, the British news service said the freighter "Ocean Belt" loaded with 58,000 tons of sorghum at Cargill's Houston terminal March 31 and headed for Guangzhou in southern China, near Hong Kong.  But it was diverted to Kashima, Japan, on May 10.  Two other ships had similar changes in destination; the "Ocean Favour" loaded with sorghum switched from Nansha port to South Korea and the "Stamford Eagle" switched the same day from Qingdao, China to a port in Japan. 

Clearly caught in the cross-hairs of the trade dispute, Cargill weighed in on the entire matter a day later, availing itself of the opportunity to send its comments to U.S. Trade Representative Robert Lighthizer, who is holding hearings on what happens next.  The proceeding started Tueday.

Cargill worries an escalating trade war will badly hurt American farmers, in short, arguing that free trade is "imperative" to the U.S. economy.  But the company itself has a lot on the line.

"Cargill began doing business in China in the early 1970’s," wrote Devry Boughner Vorwerk, Cargill's Corporate Vice President, Global Corporate Affairs.  "We now have a presence across mainland China, with over 50 locations and 7,000 employees. Our operations include six oilseed crush plants, 31 animal nutrition facilities, and a state-of-the-art integrated poultry production complex."

Vorwerk noted that Cargill has facilities in 70 countries and employs 150,000 people world-wide, but of those, 37,500 are in the U.S.  This is an American enterprise linking the work of American farmers with markets across the globe.

"As the global economy becomes increasingly integrated, United States' leadership in support of free trade is an imperative for economic growth," said Vorwerk. "The business community looks to the Administration to safeguard and expand market opportunities for American businesses and workers who benefit from access to foreign markets."

Cargill makes the case that the Chinese and American economies are linked... by food and agriculture, and by trade.

As Minnesota and Iowa farmers plant this year, still reeling from low market prices of last year's harvest, the ominous warnings being sounded by exporter Cargill are the latest dark cloud over farm country.

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