(Agrimoney) – US officials abandoned expectations of a sharp increase in Chinese corn imports which have been a mainstay of grain bulls for years, noting strong domestic supplies and competition from other grains.
The US Department of Agriculture, in long-term forecast for global crop supply and demand, slashed to 6.5m tonnes its estimate for China’s corn imports in 2023-24.
A year ago, it had forecast shipments that season at 22.0m tonnes.
The forecast undermines a narrative of soaring Chinese corn imports ahead which many investors have stuck to for years – but which has been repeatedly undermined, by increasing domestic harvests and, more recently, by the furore over Syngenta’s MIR 162 genetically modified variety.
While MIR 162 had been approved by Washington it was not, until December, approved by Beijing, prompting a string of rejections of cargos of imported US corn, prompting such trade to grind to a halt.
‘Limit the growth’
The USDA highlighted growing Chinese demand for corn, driven by “growth in its livestock sectors, as well as by rising industrial use”.
However, officials also highlighted that “China’s current large domestic supplies of corn will limit the growth of corn imports in the near future”.
Chinese corn inventories are expected to end this season at some 79m tonnes, 40% of the world total.
And the USDA also noted the growing preference by Chinese importers for other grains, such as sorghum, which are not, like corn, subject to quotas.
“China’s sorghum imports have increased sharply over the past 2 to 3 years, and continued growth is projected from 2015-16’s level of 4.8m tonnes,” the USDA report said.
Sorghum, barley needs
Indeed, China’s sorghum imports as of 2023-24 were pegged at 5.4m tonnes – a sharp upgrade from the 1.9m tonnes the USDA forecast a year ago.
“Increasing sorghum imports are driven by feed demand and the high price of corn in China, resulting from restricted corn imports and domestic policies that support the domestic corn industry and Chinese farmers’ income,” the report said.
Expectations for Chinese barley imports were also increased, and expected to reach 5.1m tonnes in nine seasons’ time, up from a previous forecast of 2.8m tonnes.
Besides growing demand for malting barley, of which China is the top importer, the country “also has rising demand for feed barley as a substitute for corn in livestock rations, since domestic corn prices are greater than international prices and corn import restrictions are maintained”.
Meat dynamics
However, even factoring in upgrades to barley and sorghum, the impact of the worsened prospects for corn volumes was to slash to 17.2m tonnes the forecast for China’s overall coarse grain imports in 2023-24.
A year ago, the USDA had the figure at 26.8m tonnes.
The downgrade implies improved hopes for China’s production, or reduced expectations for domestic consumption, or a mixture of both dynamics, although the briefing did not go further into its reasoning.
However, the report did raise expectations for China’s imports of beef in 2023-24, by 140,000 tonnes to 924,000 tonnes, and of pork by 272,000 tonnes to 1.37m tonnes – making it the top importer of pig meat, overtaking Japan.
“China’s pork imports have risen sharply since 2009 and are projected to increase steadily,” the briefing said.
With the USDA also downgrading its forecast for China’s soybean imports in nine seasons’ time, by 3.1m tonnes to103.9m tonnes, the dynamics might appear to imply reduced expectations for the country’s own meat production.
Argentine woes
China’s reduced trade needs will curtail at 140.3m tonnes world corn imports in 2023-24, below a previous estimate of 145.0m tonnes.
However, it will be Argentine exporters which take the hit – with volumes seen at 14.7m tonnes – well below the forecast of 23.4m tonnes a year ago, when the USDA foresaw the country overtaking neighbouring Brazil in shipments.
“Argentina’s corn production is projected to increase only slightly, mostly through increasing yields,” the USDA said.
“Corn area is discouraged by an expected continuation of quantitative export controls.”
US exports were pegged at 62.2m tonnes, an upgrade of 6.3m tonnes
