China Corn Imports At Annual Record On Day 1 Of The New Crop Year
September 1st begins the new crop marketing year for corn and soybeans, and China has already committed to buying more corn this crop year from the US than it was expected to import from all global sources combined.
- China is aggressively buying corn and other agricultural products; US corn and soybean farmers are benefiting.
- The USDA projected last month that China would import a record total of 7 million metric tons of corn in the 2020/21 crop year but China has already committed to import over 9 million metric tons from the United States alone.
- China is also expected to import a record 99 million metric tons (3.6 billion bushels) of soybeans from all global sources in the new crop year.
- The Chinese have already committed to purchase more soybeans this year from US farmers than they did in all of last year.
China’s food woes could be the main driver behind its record level of corn import purchases in this new crop year for big grains like corn, soybeans and sorghum.
The Asian powerhouse’s highest prior level of total annual corn imports from all global sources occurred last year in the 2019/20 crop year with 7 million metric tons of corn imported. At almost 40 million bushels of corn per metric ton, China has already committed to purchase over 80 million more bushels of corn for import in the new 2020/21 crop year that begins today than it has in any other year in its history, and that’s just the amount they’ve committed to buy from US farmers.
Granted, US corn prices right now are the most competitive on earth, and the Chinese have been selling their state-held corn inventories at domestic prices at almost double the value of US corn prices, but China seems to be buying corn out of necessity, not the desire to profit from international arbitrage.
Chinese traders are smart and opportunistic; they know that the approaching autumn harvest season has historically provided some of the best pricing levels of the year. They also know that the USDA will likely revise its record high estimates for US corn and soybean production downward in its next report on September 11; hence China may be anticipating a change by buying more corn earlier in the year than expected. The lack of August rains and the Derecho storm in America’s heartland have yet to be factored into official US government production estimates.
The world’s most populous nation has also been aggressively buying soybeans from both the US and Brazil, the world’s top two exporters of the oilseed. In addition, China has been buying sorghum, pork, beef and poultry products in the US and around the globe, all in an effort to stem its rapidly rising domestic food prices.
All of this will help farmers, particularly those in the United States. And China’s aggressive buying of US agricultural goods will help them adhere to the Phase One Trade Deal, which is a bright spot in otherwise strained relations between the two largest economies on the planet.