In the second week of March, the USDA confirmed that China had bought another 1.1 million tonnes of corn from the 2020/21 marketing year, taking its purchases of U.S. corn to 19.9 million tonnes this year alone. This latest purchase from China takes total U.S. net corn sales to 60.6 million tonnes already, with just under half the year still to run as well as extensive campaign programs still to promote in Mexico and Japan.
China Failed to Boost Corn Output
China was forecasted to increase the area sown with corn in its main grain regions this year in an effort to bolster food security and maintain self-sufficiency. However, Chinese corn prices rose this year as corn stuck has significantly shrunk, forcing the country to procure large quantities of foreign corn, especially from the United States. Chinese corn demand has surged back due to the expansion of the pig herd in the world’s largest pork-producing market.
According to the National Bureau of Statistics, China planted 41,264 million hectares of corn in 2020, producing 260.67 million tonnes of grain. However, China´s corn production in 2021 is predicted to decrease 4% to 250 million tonnes due to concerns about field crop pests. With larger pig farms recovering, pig feed, the corn processing industry picking up in China, and a constantly increasing feed demand have made the country’s domestic corn supply insufficient. China is now on the path to turning into the larger importer of yellow corn next year.
China’s Corn Imports Forecast Record High
The US Department of Agriculture lifted its forecast in February for China’s corn imports in 2020-21 to reach a record of 24 million tonnes, up 6.5 million tonnes, or 37%, from its January projection. China was forecast to be the world’s biggest corn importer in 2020-21, followed by Mexico at 16.5 million tonnes and Japan at 15.6 million tonnes.
In 2020, corn imports to China amounted to approximately USD 1.2 billion, gaining a 12.5% increase from 2019. Nevertheless, the most significant change was the replacement of China´corn suppliers, which by 2019 remained dominated by Ukraine with 84% of China´s share corn import market. For the next year, there was a dramatic change in Chinese imports, as U.S. imports grew by around 2,000% and gaining a 49% share which used to belong to Ukraine.
Source: ITC Trade Map, Tridge
U.S. Corn Sales Surge High for the First Quarter of the Year
US corn net sales in 2020 were estimated at USD 9.3 billion, a 17% increase from the USD 7.7 billion reported in 2019. With China buying a record high of 19.9 million just over the first three months with Japan and Mexico also weighed in with six-figure volumes, the USDA has reported that the outlook for the 2020/21 marketing year will be beyond the current 66 million MT estimated at the beginning of the year.
The U.S expects to strengthen its leadership in 2021 as the biggest corn supplier worldwide, as China will keep increasing its imports. By 2019, the U.S. had 23.5% of the global export share, followed by Brazil with 22.3% and Argentina with 18%.
Source: ITC Trade Map, Tridge
China´s increasing demand for corn has increased U.S. exports in 2020 by adding a USD 1.2 billion trade flow that was absent over the previous years. China went to have the 0.7% of U.S. exports share in 2019, to represent 12% in 2020.
With substantial market opportunities in China, several corn-producing countries and key suppliers are focusing on China. More small and middle-sized corn producers and traders start shifting attention to China, trying to discover market potential. Traditional corn suppliers such as Ukraine, Laos, and Myanmar will compete on price and quantity available with the U.S. to remain competitive in the market. As for new suppliers to China, such as Brazil, Argentina, and Russia, they will try to reach purchasing opportunities to compete in the exponentially growing Chinese corn market.
Sources:
- Food Business News. "USDA may have to raise China corn import forecast"
- Hellenic Shipping News. "Will China boost corn output or become a permanent importer?"
- S&P Global. "China's buying to keep US corn prices firm, stocks tight"
- World Grain. "China makes large purchase of US corn"