China’s Agricultural Buying Spree Continues As 2020 Imports Surge

Food production problems, including Swine Fever, locusts and bad weather for growing crops, have hit China hard. Relatively stable global agricultural prices, while they last, are motivating Chinese importers to aggressively resupply.

China is buying agricultural products at a blistering pace. Declining food stocks have pushed the Chinese into international markets in order to quell domestic supply fears and rebuild stocks.

The numbers, released September 23, 2020 by China’s General Administration of Customs and widely reported in the press, are almost mind-numbing. The year-on-year percentage changes, that is, the year to date pace of import purchases by China at the end of August 2020 versus the end of August 2019, are sobering.

The following is a quick take on the Asian importing powerhouse’s agricultural buying spree for the first eight months of 2020 versus the first eight months of 2019:

  • Sorghum + 490%

Sorghum is a major cereal grain used in China primarily as animal feed; sorghum imports have rocketed as Chinese pig farmers scramble to find affordable feed for China’s rapidly rebuilding swineherd, which was decimated by African Swine Fever in late 2018 and 2019.

  • Wheat + 137%

China is the world’s largest producer and user of wheat. Locusts (no kidding) and floods in the wheat growing regions of China have hampered production; China is importing wheat as a result.

  • Pork + 134%

The Chinese people eat more pork per capita than any other nationality in the world. Before it lost over half its swineherd to African Swine Fever it had half the world’s pig population. Efforts at rebuilding the swine population are succeeding, but it takes a while to breed, grow and fatten pigs for slaughter, which means while the Chinese rebuild their swineherd they have to import pork from elsewhere.

  • Corn + 50%

Similar to the situation with wheat, corn growers in China are facing big problems. Farmers are said to be withholding what corn they do have from markets, and the Chinese government has been steadily selling corn out of state owned reserves to the tune of over two billion bushels in the past 4 months, but domestic corn prices are still rising. Chinese importers are set to break a record for annual corn imports in a single year, if only to replace part or all of the state owned inventory that’s been sold so far.

  • Soybeans +15%

It might not sound like much given the triple digit percentage increases in pork, wheat, and sorghum imports, but 15% represents an enormous amount of soybeans, the number one imported agricultural commodity into China. The USDA is projecting China will break another soybean import record this year at 99 million metric tons (over 3.6 billion bushels) but private analysts are already projecting even higher soybean import numbers. September purchases of U.S. soybeans by Chinese importers have been occurring daily, setting a new record pace of U.S. soybean export commitments in the new crop year that began September 1.

  • Sugar +13%

China is the world’s third largest producer of sugar; a drought last season caused Chinese sugar production to fall, tightening supplies. The US Foreign Agricultural Service speculated China’s sugar production could fall this year, and bad weather this season hasn’t helped. Sugar imports have increased as a result.

  • Barley – 12%

An outlier in the Chinese agricultural imports story is barley; declining imports of the brewing and feed grain are due to China’s trade spat with Australia, by far the main supplier of barley to China. The two countries have been sparring over anti-dumping claims; the past year has seen barley intentionally targeted by China with the imposition of 80% tariffs on Australian barley imports. Just last week, the Chinese suspended Australian barley imports entirely amidst the alleged discovery of “pests” in recent shipments.

China’s agricultural imports bear close watching; there appears to be no slowdown in their purchasing pace, which could eventually impact global food prices. Stay tuned.

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