High Chinese Demand Boosts Brazilian Corn Exports in November

Published 2022년 11월 30일

Brazilian corn hasn't been shipped to China much during the past five years due to phytosanitary concerns. China's major corn suppliers thus far have been the US and Ukraine. But in May 2022, China decided to start purchasing corn from Brazil in order to reduce its dependency on the US and to fill the gap in supply from Ukraine that was halted due to the Russian-Ukraine war. The participation of China in Brazilian corn exports would lead to a significant price boost for Brazilian farmers in the next season. This also poses a threat to US corn in the Chinese market.

In the last five years, Brazilian corn has rarely been exported to China because of phytosanitary issues. Therefore, the US and Ukraine have been China's top corn suppliers. But in May 2022, China made the decision to begin importing corn from Brazil to lessen its reliance on the US and to fill the gap in supply from Ukraine that was halted due to the Russian-Ukraine war. After an agreement was finalized in May and China granted approval for more than 130 facilities to import Brazilian corn in October, the first ship carrying Brazilian corn to China departed in late November.

Source: Trademap

The Chinese market anticipated the start of corn supplies from Brazil in December when the US had just finished harvesting its crop. However, because the US corn is becoming more expensive as a result of decreased production, the first shipment of Brazilian corn arrived sooner than expected.

The first shipment of 67,000 mt, arrived in November and more than 280,000 mt are expected in the following two weeks after receiving phytosanitary approvals and permits from Chinese authorities. According to the National Association of Grain Exporters of Brazil (ANEC), China will import 5 million mt of corn from Brazi in MY 2022/23. USDA forecasts Chinese corn imports of 18 million mt in MY 2022/23.

As other exporters suffered difficulties due to limited US supply, the Ukraine-Russia war, and the completion of Argentine corn, Brazilian corn remains in high demand and its exports are still growing significantly. It is reported that 7 million mt of Brazilian corn will be exported in November 2022, up by 192% YoY. ANEC predicts that Brazil would export 38.3 million mt of corn for the first 11 months of the year, which is already much higher than in 2021 (20.43 million mt). About 2 million mt of Brazilian corn has been booked for December shipment and may rise even further to 4 million mt. Given the pace of shipments, Brazilian corn may come close to the record-breaking year of 2019 (43.28 million mt).

Source: Trademap

The Brazilian corn market continues to see deals that are aimed at unloading warehouses until January when the soybean harvest starts and the country needs as much storage as possible given the amount of anticipated soybean production. The major Brazilian corn export destinations are Egypt, Iran, Spain, Japan, and South Korea in 2021. The participation of China in Brazilian corn exports would lead to a significant price boost for Brazilian farmers in the next season. This also poses a threat to US corn in the Chinese market.