“The country’s buying has put it on a trajectory to emerge as the top grain buyer by far this season, shattering previous purchase records and marking a clear break from China’s history as a relatively self-sufficient player in grain markets.
“That purchasing, and problems in other key producing countries, has helped lift corn, wheat and barley prices worldwide – potentially sending shocks through the grain-reliant dairy and meat sectors in coming months, analysts and traders said.”
The Reuters article noted that, “About 15 million tonnes of barley and sorghum imports are expected in the new marketing year, according to two analysts. Wheat imports in 2020-21 are expected to reach 9 million tonnes, a record, according to a state-owned trader.
“China’s voracious appetite is rocking the global market.”
Gu, Heath and Thukral added that, “Additional U.S. corn purchases are also expected.”
Also last week, the USDA’s Foreign Agricultural Service (FAS) indicated in its Grain: World Markets and Trade report that, “China’s imports of coarse grains for 2020/21 (Oct-Sep) are forecast higher this month, mirroring the level seen in 2014/15 when imports spiked due to strong prices in the domestic market. The rise for 2020/21 is supported by strong recovery in the swine sector, which has been driving feed demand higher. Corn prices in the domestic market have rallied since February, and in October, the national price averaged around $362 per ton, the highest since August 2015.”
The FAS update stated that, “Greater imports are primarily driven by corn. The surge in corn imports is partly based on China Customs Statistics and U.S. Grain Inspections data through early November, which indicate that imports will far exceed the tariff-rate quota (TRQ) level of 7.2 million tons in calendar year 2020. There have been no public statements that would indicate that additional quota has been allocated by the National Development Reform Commission, the authority governing the TRQs.”
With respect to wheat, FAS stated that, “China wheat imports of 8.0 million tons in 2020/21 are forecast at their highest level in 25 years as State Trading Enterprises are helping bolster domestic stocks and taking advantage of competitively priced foreign supplies.
“The demand for feed-quality wheat has surged because of significant inflation in the domestic corn market,” FAS said.
Keith Good is the social media manager for the farmdoc project at the University of Illinois. He has previously worked for the USDA’s National Agricultural Statistics Service, and compiled the daily FarmPolicy.com News Summary from 2003-2015. He is a graduate of Purdue University (M.S.- Agricultural Economics), and Southern Illinois University School of Law.