Surging demand for feed grains in China has driven the market into uncharted territory, and is beginning to affect the global market for grains used for human consumption, especially wheat.
China’s demand for feed corn, and hence corn imports, can be moderated to some degree by substituting other grains, such as wheat. However, doing so would put China in greater competition with other major importers of wheat worldwide.
Corn futures in China have hit all time highs, of over 2600 RMB/tonne. Physical corn is now trading at a premium of 39 RMB/tonne over wheat, after starting the year 477 RMB/tonne below wheat and reaching parity a month ago. As a result, wheat has begun to be bought for animal feed.
Corn and rice prices also are on par, with rice trading only 1 RMB/tonne over corn, raising the possibility that rice may soon be used for animal feed.
Corn stocks in China are currently tight. The USDA estimates China has a stocks-to-usage ratio of 67% in the 2020/2021 marketing year, but Gro estimates indicate significantly lower amounts of corn in storage.
Imports of many grains have surged. From January to September of this year, China has imported 6.7 million tonnes of corn (up 72% from a year earlier), 5.8 million tonnes of wheat (up 187%), and 3.5 million tonnes of sorghum (up 467%).
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