China’s customs officials expanded the country’s list of approved Brazilian corn exporting facilities last week, setting in motion a reboot of global corn trade flows. Today, Brazil, the world’s second-largest corn exporter, ships most of its corn to Iran, Spain, Japan, Vietnam, and Egypt, but these new approvals let it ship much more of its crop to China.
Gro data shows that over the past five years China's annual corn imports have risen more than tenfold as livestock feed needs have skyrocketed, and the US, the world’s top corn exporter, and Ukraine have benefited from these increased sales. Last year, Ukraine supplied nearly one-third of China’s corn imports. But after Russia invaded Ukraine, China was forced to seek out alternative sources of supplies, as Gro highlighted here.
Small volumes of Chinese imports from Brazil may begin soon, but larger shipments are not expected until 2023.
As Brazil corn FOB export prices are significantly lower than US prices, China’s move could mean fewer sales for US farmers. Brazil’s corn production has grown significantly in 20 years, and the country’s safrinha (or second) corn crop, which now represents 75% of its total production, is harvested in June to September, just ahead of the US’ main crop.
The USDA expects China to import 18 million tonnes of corn in the 2022/23 crop year, which began in October.
For Brazil, the forecast for a third consecutive year of La Niña conditions could have far-reaching effects on production and on exportable supplies, however. A key factor in Brazil’s safrinha production is the timing of the onset of the dry season. If the dry season starts early or if safrinha is planted later than its typical January to February window, the probability of dry weather negatively impacting yields is higher. When Brazilian crops suffered from deep drought in 2021, US growers stepped in to fill the gap.
While La Niña isn’t a perfect indicator of weather in Brazil, Gro users can monitor drought in Brazil as the new growing season gets underway. Gro’s Navigator for Agriculture app allows users to weight the Gro Drought Index and other indices specifically for corn-growing areas to provide a detailed reading of growing conditions. Gro’s Brazil Corn Yield Forecast Model can be closely monitored for in-season yield updates.
To date, however, Brazil’s corn exports to China have been small and erratic, due to China’s complex inspection requirements. Excluding a shipment of 30,000 tonnes in June 2022, Brazil’s last shipment of note to China was August 2019. By contrast, about 25% of total US corn exports went to China in 2021/22.