China’s bumper harvest may cool corn-buying binge, impact progress of US trade deal
- China’s agricultural imports have been closely watched by investors and businesses tracking the progress of the trade deal with the United States
- China has imported about 23 million tonnes in the 2020-21 marketing year, close to US Department of Agriculture’s forecast of 26 million tonnes
China’s record corn-buying spree – a cornerstone of its trade deal with the United States – may be running out of steam, with risks growing that imports by the top buyer will fall short of US official estimates.
This is already starting to weigh on Chinese corn prices, narrowing the gap with overseas prices and hurting the attractiveness of imports, according to traders and analysts.
China’s corn purchases in 2021-22 will probably miss the US Department of Agriculture’s (USDA) prediction of 26 million tonnes, said Darin Friedrichs, senior Asia commodity analyst at StoneX Group.
That forecast “is pretty aggressive and I don’t think we’ll see it”, he said.
The nation’s agricultural imports, especially from the US, have been closely watched by investors and businesses tracking the progress of the trade deal.
Prices across a variety of farm products have soared in the past year because of Chinese demand for crops to feed its expanding hog herd, stoking concern about food inflation. Corn in Chicago jumped to an eight-year high in May.
China has imported about 23 million tonnes in the 2020-21 marketing year, close to USDA’s forecast of 26 million tonnes.
The department kept its official forecasts unchanged for 2021-22, while the USDA Foreign Agricultural Service said imports would likely be 20 million tonnes.
The purchases also help meet commitments under the US trade deal.
High corn prices have spurred Chinese farmers to switch away from soybean planting in the northeast, so there should be increased corn production this year, Friedrichs said.
“The market is bifurcated – China’s diet is becoming more Western, and that creates a supply deficit for high-quality wheat,” Friedrichs said.
“China will likely import relatively large amounts of wheat this year to help supplement the stocks of high-quality wheat.”