USDA has raised sharply its forecast of corn import to China in 2020/21 MY. USDA set its new estimate at 22 mln tonnes compared to previously expected 7 mln tonnes.
Decline of corn stocks in China and high inner prices were the main reasons for the upward revision.
Chinese Ministry of Agriculture says that the country has been facing the deficit of inner corn supply in the recent years. The Ministry hold the state auctions in May-September selling corn from reserves. It managed to sell 57 mln tonnes of corn. The last auction was hold on September 13. The Ministry does not plan to sell corn until the spring of 2021.
The insufficient supply may force China to import substantial volumes of corn to cover inner requirements, limit further price increase and accumulate necessary stocks for 2021.
China has already used its temporary stocks of wheat and rice this year and imported feed wheat to replace expensive corn.
As of October 22, China booked more than 10 mln tonnes of US corn to be delivered in the current MY. About 2 mln tonnes out of this volume have already arrived to China. USDA says Ukraine can partially cover Chinese needs this season. The country supplied substantial volumes of corn to China in 2019/20 MY.
APK-Inform says Ukraine is one of the leading suppliers of corn to China, and it shipped 721 thsd tonnes of the grain to this destination in October. This volume was record for October. Ukraine exported 136 thsd tonnes of corn to China in October 2019/20 MY. However, further massive supply of Ukrainian corn to China is up in the air amid expected high demand from the EU and uncertainties regarding corn crop size in Ukraine. APK-Inform set Ukrainian corn export at 25.2 mln tonnes in 2020/21 MY, down 12% compared to the preceding season. It is likely that updated data on corn crop will bring downward correction to the forecast.
Some market participants say China has already taken off the annual tariff quota of the WTO for import of 7.2 mln tonnes of corn. Inofficial sources says China implemented the additional quota for import of 5 mln tonnes of corn in December.
American Farm Bureau Federation says China has faced the lack of corn supply due to recovering of pig population resulting in growing demand for corn and its appreciation on the domestic market. Current corn prices are 159% higher compared to the same period of 2017.
Moreover, China considers increasing of the tariff quotas on corn import. Otherwise, importers may be forced to pay 65% import duty on corn.