Chinese Grain Trade Gains


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By Derek Langston, Head of SSY Consultancy and Research

The US Department of Agriculture (USDA) made one of its largest changes to a grain trade projection this week by forecasting a record 24.0 Mt of Chinese corn imports in the trade year to end-September, a massive 6.5 Mt increase from its previous forecast just one month earlier and some 17 Mt above expectations in October 2020 (see first chart). The strong pace of shipments and robust sales have prompted the most recent upward revision.

 

 

Underpinning the transformation has been rebounding demand for animal feed in China. Swine fever outbreaks in 2018-19 had depressed soyabean import demand before last year’s recovery (second chart). Indeed, the USDA still does not anticipate 2020/21 volumes to meet its original expectations for 2018/19 made back in June 2018.

The USDA has also lifted its 2020/21 (July-June) projection for wheat imports into China to 10.0 Mt, the highest for more than 25 years and more than three times the 2018/19 total. France was the leading supplier of wheat to China in the 2h20 with the landed price of French wheat at a clear discount to domestic. Although primarily a food grain, its relative cheapness made wheat an alternative to corn for animal feed in the south of the country.

In addition, China’s barley import projection for 2020/21 (Oct-Sep) has also been lifted by the USDA to 8.3 Mt from the previous January forecast of 7.0 Mt. Hefty tariffs imposed on barley from one of the world’s largest exporters, Australia, is rerouting trade flows.

To see how these developments will affect SSY’s quarterly export projections by country, the February update to the Dry Bulk Forecaster is now available on Premier Club. For subscription details, please email research@ssy.co.uk

 

SSY Consultancy & Research                                                                           

While every care has been taken to ensure that the information in this publication is accurate, SSY can accept no responsibility for any errors or omissions or any consequences arising therefrom. Figures are based on the latest available information, which is subject to subsequent revision and correction. The views expressed are those of SSY Consultancy and Research Ltd and do not necessarily reflect the views of any other associated company. Reproducing any material from this report without permission from SSY is strictly prohibited. Please click here to view our terms and conditions in section 6.2.

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