Jared Malsin reported in today's Wall Street Journal that, "An international agreement to restore Ukraine’s Black Sea grain exports is showing early progress, with 18 ships moving to and from…
Bloomberg News reported on Friday that, “China is likely to take a break from buying large amounts of U.S. corn after record purchases this year because the domestic harvest is approaching and local prices have slumped to the cheapest since late 2020.
“The world’s largest importer has already bought more than 10.5 million tons of U.S. corn for the 2021-22 marketing year, and over 23 million tons for the current season, U.S. Department of Agriculture data show. Total imports next year will likely be 20 million tons, according to the USDA’s Foreign Agricultural Service, while the USDA’s official forecast for this year is 26 million tons.”
The Bloomberg article noted that, “The drop in the domestic market and higher shipping costs mean there’s less incentive to buy from overseas. A fresh round of purchases from the U.S. for state stockpiles seems unrealistic, said one industry source. Meanwhile, private companies have already used up their quota allocations, so additional purchases are unlikely before the end of the year, said the source, who asked not to be identified commenting on buying strategy.”
Friday’s article added that, “Still, even with a higher harvest, China expects a corn supply deficit in the next marketing year of more than 40 million tons, which will need to be filled by imports of corn as well as sorghum and barley, said Meng Jinhui, a senior analyst with Shengda Futures in Beijing. A fresh round of purchases could occur if there is any sign of improvement in bilateral relations between China and the U.S., but not in the short term, Meng said.”
Recall that a recent news article from Reuters pointed to increased corn planting in China, which could also have a potential impact on import demand.
In a closer look at higher shipping costs, Reuters writers Naveen Thukral and Gavin Maguire reported this week that,
Rising costs to ship crops globally are adding to concerns about food inflation that are already at decade-highs and hitting cost-sensitive consumers in import-dependent markets.
“The cost of bulk carriers that move grains and oilseeds from production hubs in the Americas and Black Sea to key consumers have roughly doubled from last year due to rising fuel costs, tighter vessel supply and longer port turnaround times amid COVID-19 curbs, according to grain and shipping sources.
“‘Freight cost has become a real challenge as it comes when we see huge increases in grain prices,’ said Phin Ziebell, agribusiness economist at National Australia Bank in Melbourne.”
This comes on top of the surge we've seen in the price of those crops, which have helped fuel a rise in global food prices to their highest in 10 years pic.twitter.com/MEK1LdUJxF— Gavin Maguire (@GavinJMaguire) July 9, 2021
The Reuters article indicated that, “The double whammy of higher crop and freight prices is pinching buyers in Asia, the top crop consuming region and home to China that accounts for more than half of the world’s soybean purchases. Japan is one of the world’s biggest corn buyers.”
This may pave the way to even higher food prices in the months ahead pic.twitter.com/chAgGSqLyn— Gavin Maguire (@GavinJMaguire) July 9, 2021
And in news regarding domestic agricultural issues in China, Bloomberg News reported this week that “China plans to broaden its agriculture insurance policies to protect more farmers and bolster production of crops including rice, wheat and corn in a bid to improve the security of food supplies.”
The Bloomberg article stated that, “China, the biggest consumer of farm commodities, strives for basic self-sufficiency in the essential cereals of rice and wheat, and seeks to restrain imports of corn as much as possible. Still, overseas wheat purchases may surge this year to the highest since the mid-1990s and corn imports have more than tripled to a record because of an expanding hog herd and crop woes.”
The Bloomberg article added that, “The government is focused on supporting grower incomes and improving technology to increase productivity in a country where farmland is limited and rising affluence is boosting demand. President Xi Jinping has said that the rice bowl of the Chinese people, in any situation, must be held firmly in our own hands, Zou noted at a press conference on Tuesday.”