May 18, 2020
China urges trading firms and food processors to boost grain and oilseed inventories
The country is preparing for a second wave of COVID-19 cases and how it could affect global supply lines, reported Reuters.
Grain traders in China, both state-run and private companies, have been told by China's Ministry of Commerce to boost inventories of soybeans, soyoil and corn, said three sources to Reuters.
One senior trader belonging to one of China's major food processors said there are concerned about supply line disruptions caused by COVID-19, such as port closures or shut down of destinations.
He referenced Brazil, one of China's main sources of soybeans and a key exporter of meat. The country has reported more COVID-19 infections compared to Italy and Spain.
A separate source told Reuters that China's Ministry of Commerce discussed with state companies with regards to securing additional supplies, especially as the COVID-19 pandemic possibly impact imports from South America.
Soybean shipments from Brazil set for March and April have been delayed due to weather issues and lack of workers from COVID-19 related containment measures. As a result, China's soy inventories have reported record lows.
While shipments from Brazil have finally arrived, China's top brass is concerned about future disruptions.
COFO, China's state-owned agriculture conglomerate as well as Sinograin, a major grain stockpile have increased soybean and corn purchases from the United States. Sources said about 240,000 tonnes of US soybeans are set to be imported early-July.
Crop import quota allocations for major grain purchasers have also been increased.
Crop export sales data from the US showed 374,000 tonnes of soybeans have been registered, significantly higher than the 60,000 tonnes average recorded in the same period back in 2016.
US pork exports to China were expected to rise but the COVID-19 pandemic has disrupted operations at US slaughterhouses, with meat output in the country reduced.
A record volume of US pork shipments have been booked by China, which may create fresh tensions between both parties should domestic meat production in the US continues to slow down while exports to China stay strong.