March 27, 2023

China buys US corn as prices decline

Traders and analysts said declining corn prices have prompted a rush of Chinese purchases of the grain, as the world's largest buyer scrambles to make up for a slow start to its import programme, Nasdaq reported.

US corn futures Cv1 fell 7.3% in February and hit a seven-month low on March 10 before China began its buying spree. The price drop, combined with uncertainty about rival supplier Ukraine's exports and improved shipping conditions along the Mississippi River, made US supplies the most appealing to Chinese buyers.

This month, a deal to export Ukrainian grain from the Black Sea was extended, but Kyiv and Moscow disagree on how long the extension will last.

USDA data showed US corn exports to China totaled 2.245 million tonnes in the week ending March 16, the third highest weekly total on record. Chinese buyers have placed orders for an additional 832,000 tonnes of corn.

China has committed to purchasing only 7.637 million tonnes of US corn since the start of the 2022/23 marketing year in September. This compares to 12.123 million tonnes in the same period last year.

For the entire marketing year 2021/22, China purchased 14.592 million tonnes of US corn, accounting for roughly two-thirds of total imports.

With Argentina's crop potential severely reduced by a devastating drought, traders predict that the United States will remain China's dominant supplier until Brazil's second corn crop, or safrinha, is harvested in June.

China previously relied on domestic production to meet local demand, importing only 7.58 million tonnes of maize in the 2019/20 marketing year. Darin Friedrichs, co-founder of Sitonia Consulting in Shanghai, said China quickly increased imports as soy production became a greater national priority.

-      Nasdaq