China is on a corn-buying spree. USDA has announced large daily export sales for the 2020-21 marketing year on four of the five days this week, culminating with a sale of 800,000 metric tons to Chinese buyers on Friday.
USDA announced sales of 1.156 million tons of Corn to China on Tuesday, then 1.224 million tons on Wednesday and then 696,000 tons on Thursday. Altogether, USDA announced sales of 3.876 million tons of corn over four consecutive days.
China is likely buying the corn to produce feed as well as replenish the country’s stockpiles, but the sales appear to be generated by profitable market conditions, said Collin Watters, director of exports and logistics for the Illinois Corn Growers Association.
“It looks like it is a real fundamental supply and demand issue,” he told Agri-Pulse. “Feed demand is strong. They’ve been rebuilding their hog herd.”
China lost much of its pigs to African swine fever and the virus appears to be resurging. Just last month, China reported a new ASF outbreak in the Xinjiang Uygur Autonomous Region, according to a report from USDA’s Foreign Agricultural Service.
Domestic corn prices in China are very high, making it a profitable deal to purchase comparably cheaper imports from the U.S., said Watters.
“It makes sense to import a lot of corn,” he said.
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China is physically importing substantial amounts of U.S. grain despite earlier market concerns that export sales might not translate into physical shipments.
“Initially, last year when things were picking up, people were wondering, ‘Are we going to see a huge wave of cancellations,” Watters said. “We haven’t seen that. These shipments are happening.”
USDA’s most recent weekly data shows that the U.S. shipped 356,900 metric tons of corn in the week of Mar. 5-11.
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