China ramps up US corn purchases as Ukraine war puts supplies at risk
- China scooped up 200,000 metric tonnes of corn last week for shipment in the season beginning September 1, according to the US Department of Agriculture
- China was also the leading buyer of US soybeans, picking up more than 800,000 tonnes
China is ramping up corn purchases from the United States as Russia’s invasion of Ukraine snarls grain exports and puts spring plantings in doubt, pushing prices higher in Chicago.
The world’s top importer scooped up 200,000 metric tonnes of corn last week for shipment in the season beginning September 1, US Department of Agriculture data showed on Thursday, the most since December.
While China was only the fourth-largest buyer for the week, the sale was notable since the Asian country had been purchasing supplies from Ukraine.
China was also the leading buyer of US soybeans, picking up more than 800,000 tonnes.
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Sales of US corn to all global destinations of more than 2 million tonnes came even as prices traded around the highest levels since the all-time peak in 2012.
The US is the main alternative for China filling a possible corn supply gap as Brazil, the world’s second-largest exporter, has limited room to increase its sales, according to Andre Pessoa, head of the Brazilian forecaster Agroconsult.
Guidelines established in a protocol for Brazil’s corn exports to China currently hampers the trade.
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Overall, demand for corn from the US, Brazil and Argentina soared in the past weeks as the war escalated, but purchases have slowed down recently, Pessoa said.
Brazil will ship around 2 million tonnes of corn in March and April, which is very unusual for those months, he said.
Corn futures in Chicago extended gains after the US export sales data and as the International Grains Council slashed its outlook for world supplies due to the war.
May-delivery futures rose by 3.2 per cent to US$7.5325 a bushel, while wheat gained 2.2 per cent and soybeans climbed by 1.2 per cent.
The corn market will be focused on just how massive the sowing is over the coming weeks. On the other hand we are a few months from winter wheat harvest and Ukraine’s deputy [agriculture] minister said crops look good
“From a fundamental perspective you have a different situation in wheat and corn,” said David Brock, marketing adviser and principle at Brock Associates in Milwaukee.
“The corn market will be focused on just how massive the sowing is over the coming weeks. On the other hand we are a few months from winter wheat harvest and Ukraine’s deputy [agriculture] minister said crops look good.”
There are growing worries that weather woes will stay pressuring available supplies in the near-term, especially with poor crop ratings and logistics disruptions.
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Argentinian farmers pegged to harvest a smaller crop due to La Nina. Brazilian farmers, on the other hand, suffered big losses in the soybean crop, but corn production can still be big, pending weather in April and May.
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