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“China May Cancel More US Corn,” as Extension Agreement on Black Sea Grain Deal “Nearing”

Bloomberg writer Hallie Gu reported today that, “Top corn importer China could cancel more purchases of the grain from the US because the country can buy more cheaply from Brazil and as some local producers of hog feed replace corn with wheat in their rations.

“China May Cancel More US Corn in Shift to Cheaper Brazil Cargoes,” by Hallie Gu. Bloomberg News (May 12, 2023).

“Corn futures in Chicago have come under pressure from Chinese cancellations of 832,000 tons in the past three weeks. Increased competition from Brazil is underscored by forecasts for it to pass the US as the top exporter this year.

China went on a corn buying spree in March, with purchases of almost 4 million tons announced by the US government between March 14 and April 14. But US corn is now less competitive, with supplies from Brazil about $30 a ton cheaper for delivery in the third quarter, traders said. Weak domestic demand for corn as animal feed is also a reason behind the cancellations.

The Bloomberg article explained that, “Wheat prices are about 180 yuan ($26) a ton cheaper than corn in Henan, and they may decline further as a bumper harvest is about to arrive on the market. Wheat also has a higher protein content than corn, and can also be used to replace some of the soybean meal used in feed.”

And Reuters writer Ana Mano reported yesterday that, “Conab, Brazil’s food supply and statistics agency, has raised its forecast for Brazilian soybean and corn production, citing favorable conditions in spite of the effects of the La Niña weather pattern, which caused drought in the south of the country early in the season.

“In its May forecast report released on Thursday, Conab predicted Brazilian farmers will harvest a record 154.8 million tonnes of soybeans, 23.3% more than in the previous season, and a record 125.5 million tonnes of corn, 11% above last year.”

Elsewhere, Reuters writer Naveen Thukral reported today that, “The USDA will release its closely watched monthly World Agricultural Supply and Demand Estimates report on Friday, which will include forecasts for the 2023/24 marketing year for the first time.

“Analysts were expecting the report to show that supplies of corn and soybeans will rise sharply in the coming year.”

Meanwhile, Reuters writers Ali Kucukgocmen and Huseyin Hayatsever reported yesterday that, “Progress was made in talks on the Black Sea grain deal held in Istanbul by the deputy defence ministers of Turkey, Russia and Ukraine as well as U.N. officials, Turkey’s Defence Ministry said on Thursday.

“The parties agreed to continue four-way technical meetings on the deal, which is set to expire on May 18, the ministry said in a statement.”

Also yesterday, Reuters writers Jonathan Spicer and Michelle Nichols reported that, “Turkey’s Defence Ministry said progress was made in the talks on the Black Sea grain deal and that the parties agreed to continue four-way technical meetings on the deal. On Wednesday, Turkish Foreign Minister Mevlut Cavusoglu said he thought the deal could be extended for at least two more months.

“Ukrainian Deputy Prime Minister Oleksandr Kubrakov said after the talks on Thursday that the grain deal should be extended for a longer period and expanded. He said the talks would continue online.”

Bloomberg writer Megan Durisin reported yesterday that, “The latest talks on extending Ukraine’s grain-export deal ended without a definitive agreement, with Russia reiterating its threat to withdraw from the pact in one week.

“Negotiations in Istanbul over the past two days between officials from Ukraine, Russia, Turkey and the United Nations made ‘positive and constructive’ progress, according to the Turkish defense ministry. However, Russia repeated a warning on Thursday that the deal will end from May 18 unless its demands for progress toward removing obstacles on its own food and fertilizer shipments are met.”

Durisin added that, “Aside from the status of the deal, markets are eyeing increases to Brazil’s corn and soy forecasts and a major US government crop report due Friday.”

And today, Reuters writer Mert Ozkan reported that, “Parties to the Black Sea grain pact are nearing a deal to extend it after talks between Ukrainian, Russian, Turkish and United Nations officials, Turkey’s Defence Minister Hulusi Akar said.”

“‘(The parties) are approaching an agreement on an extension of the grain agreement period,’ Akar said in a statement released by the defence ministry on Friday.”

Keith Good Photo

Keith Good is the Farm Policy News editor for the farmdoc project. He has previously worked for the USDA’s National Agricultural Statistics Service, and compiled the daily News Summary from 2003-2015. He is a graduate of Purdue University (M.S.- Agricultural Economics), and Southern Illinois University School of Law.

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