China’s buying binge of a host of grains is shattering the country’s previous purchase records.
China’s customs data shows the country has imported 6.7 million tonnes of corn in the first nine months of 2020, versus 3.9 million tonnes a year earlier, driven by a spike in domestic corn prices and supply shortages. China has purchased 5.9 million tonnes of wheat, nearly three times last year’s volumes, and 3.5 million tonnes of sorghum, up nearly sixfold from a year earlier. China has also purchased 74.5 million tonnes of soybeans in the first nine months of 2020, up 15% from 2019.
Chinese imports of coarse grains is driven by a strong recovery in the hog sector, which has pushed feed demand higher. Corn prices in the domestic market, which have been rising since February, averaged about 2,532 renminbi/tonne in October, the highest price since 2014.
Gro has long suggested that domestic inventories in China were much tighter than the USDA was projecting. The US government’s apparent underestimation of China’s domestic supply recalls an earlier miscalculation that gave rise to the Russian Wheat Deal of the early 1970s. The Soviet Union, suffering crop failures, purchased vast amounts of US wheat at subsidized prices, sparking a food price crisis in the United States.
Today, in addition to the demand China is placing on US supplies, ongoing dry conditions in South America are hurting prospects for that region’s 2021 corn and soybean crops. Brazil’s domestic consumers are already feeling the sting of grain shortages and inflation. If you'd like to learn more about the China data available in Gro please contact us at firstname.lastname@example.org.
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