China has agreed to import corn from Brazil, in a further sign of how the Russia-Ukraine war is reshaping global trade flows.
China has more than doubled its annual corn imports in the past decade — largely for livestock feed — with most of the increased purchases in recent years coming from the US and Ukraine. Ukraine first began shipping corn to China in 2014 and by last year provided nearly one-third of all China’s corn imports. (To see monthly corn trade flows into China by origin click here.)
However, with Ukraine’s grain exports blocked by war, China and other countries have been forced to seek out alternative sources of supplies.
Beijing’s deal with Brazil will initially be aimed at replacing at least part of Ukrainian imports. But in the longer term it could potentially take export share away from the US and encourage further corn planting in Brazil. Roughly 25% of total US corn export volumes currently go to China. US corn sales to China were valued at $5.1 billion for 2021.
Brazil is the second-largest corn exporter in the world, with most of its shipments going to Iran, Spain, Japan, Vietnam, and Egypt. Brazil’s corn exports to China have been small and erratic, with a shipment of 35,000 tonnes in April 2022 being the only shipment of note since 2019.
China’s import agreement with Brazil still requires formal approval by China's Agriculture Ministry. Documentation on phytosanitary measures must also be finalized to meet Chinese requirements.
Brazil’s corn harvest last year was less than a quarter the size of the US crop, making Brazil the third-largest corn producer in the world. But the Brazilian crops have struggled with dry conditions brought on by La Niña climate events. In 2020/21, corn production dropped by 15% from a year earlier. For this year, Gro’s Brazil Corn Yield Forecast Model is predicting production will increase by double digits, but will fall well short of current USDA projections.
China’s own corn production helps determine the amount of corn it needs to import. Gro’s China Corn Yield Forecast Models offers in-season projections for the crop, which is harvested in September/October. Gro’s Chinese cash corn prices, and the price relationship among competing feed grains which can be viewed here, also provide valuable clues to China’s corn supply and demand balance.
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