China’s Corn Import PotentialPosted on 16 Nov 2020
By Derek Langston, Head of SSY Research
The US Department of Agriculture (USDA) has almost doubled its forecast for Chinese corn imports in the current trade year to September, implying significant shifts in trade flows.
From its previous 2020/21 projection of 7.0 Mt made only a month ago, the USDA now expects corn imports into China to jump to 13.0 Mt from an estimated 7.6 Mt in 2019/20, the consequence of recovering animal feed demand and weather-related shortfalls in domestic production.
This is part of an anticipated overall gain in world corn trade of 8.3 Mt to 183.5 Mt.
Simultaneously, the USDA has made a massive increase to its projection for US corn exports in 2020/21, projecting a year-on-year leap of almost 20 Mt to 66.0 Mt (and marking an upgrade of 8.0 Mt from its October figure), thanks to reduced competition. The initially positive outlook for Ukraine’s crop has dimmed significantly due to drought, with a downgrade of 8.0 Mt in this month’s projection of 22.5 Mt.
Together, these changes imply reductions in short-haul trades from the Black Sea to the EU (where projected imports have been cut 4.0 Mt in response), plus additional long-haul trades to China.
With projected US corn exports now overshadowing Brazil’s 34.0 Mt (more of which could be shipped transatlantic to the EU), the US is well-positioned to expand its market share in China.
In addition, Brazilian corn exports are usually concentrated in the second half of the calendar year, whereas US corn exports typically ramp up during the first quarter, potentially improving demand for Ultramax through to Kamsarmax vessels on US-China corn trades at this time.
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