China, which has relied on the US for most of its corn imports, may import a “substantial amount” of the grain from Brazil this season, after lowering technical hurdles to some genetically modified characteristics.
China’s corn imports in 2022-23 will fall by 5.0m tonnes year on year to 18.0m tonnes, the US Department of Agriculture’s Beijing bureau said, in an estimate in line with Washington’s official forecast.
However, the bureau stressed the enhanced role that Brazil was likely to take in meeting these imports after China agreed in May to water down phytosanitary restrictions which had prohibited shipments under a longstanding trade deal.
“China may turn to Brazil for a substantial amount of its imports” this season, the bureau said.
It added that, after Beijing agreed to further temporary concessions, shipments may start “before the end of” 2022, rather than midway through 2023 as had been expected.
Chinese importers “have already applied for import permits” for Brazilian corn, which costs some $406 per tonne, after tariffs, for end-2022 delivery.
That is below the $435 per tonne, after tariff, quoted for imports of US corn as delivered in Guangdong in south east China, and the and some $14 per tonne cheaper than domestic supplies, the bureau said.
“Brazilian traders project over 1m tonnes of corn exports to China in calendar year 2022.”
The dynamics imply the US – which had looked set to gain significant share of China’s corn imports, after war hampered exports from rival Ukraine – may lose out to Brazil instead.
Chinese corn imports from the US reached 20.9m tonnes in 2020-21, out of total corn buy-ins of 29.5m tonnes.
However, the total fell markedly last season, even as China’s imports fell back, being estimated by the USDA at 23.0m tonnes in 2021-22. The US exported some 14m tonnes of corn to China during 2021-22, on a September-to-August basis, according to the USDA.
Chinese demand for US corn has started 2022-23 on a weak note, with total commitments – that is, completed exports and unfulfilled orders combined – at 3.37m tonnes as of September 22, down from the equivalent figure of 11.91m tonnes a year before.
Supply vs demand
The bureau added that China’s corn production this year would, at 270.0m tonnes, come in 4.0m tonnes below the USDA’s official expectations, after soybeans took area from the grain, while heavy rainfall depressed yields in the key north east growing region.
“The production losses caused by excessive rains throughout June and July in north east China cannot be fully offset by better yields projected in the North China Plain,” the bureau said.
In Jilin province, which had this year received nearly double the average rainfall, a crop tour revealed “some shorter-than-normal corn attributed either to late planting, too much precipitation, or both”.
Meanwhile, China’s 2022-23 corn demand was pegged at 297.0m tonnes, 2.0m tonnes above the official USDA estimate, with prices encouraging livestock farmers to prioritise corn over wheat in feed.
With imports declining, the dynamics would lead to a run down in China’s corn stocks of 9.0m tonnes year on year to 207.2m tonnes, the bureau forecast.