May 28, 2022
China to allow Brazilian corn imports to replace Ukrainian shipments
China's Ministry of Commerce said the country's customs authority has finalised an agreement to allow Brazilian corn imports to replace Ukrainian shipments, an alternative to US corn, Reuters reported.
Similar agreements covering imports of soy protein and soymeal from Brazil are anticipated to be reached during discussions next month, according to a source familiar with the talks who spoke on the condition of anonymity.
Currently, nearly all of China's corn imports originate from the US and Ukraine. However, Russia's invasion of Ukraine has hindered grain exports from the Black Sea, causing importers and food corporations to scramble for other sources.
China's corn imports hit a new high in 2021, as supply shortages pushed up local prices.
The trader said the US accounted for about 70% of China's corn imports last year, and its proportion was projected to rise owing to the need to find alternatives to Ukraine.
As a result of Beijing's agreement with Brazil, US exports to China may be reduced. According to industry experts, China might become a competitor for European Union purchasers seeking corn imports from Brazil.
Terry Reilly, senior commodity analyst for Futures International said this is a shift in global trade flows.
Traders said the China-Brazil agreement pushed down Chicago Board of Trade corn futures by 1.8%.
An agreement for exporting Brazilian corn to China was signed in 2014 but little trade had happened because of complex inspection requirements.
According to an official participating in the discussions, the amended deal reached during high-level talks on Monday is anticipated to be inked in the coming weeks, paving the door for more substantial commerce.
According to dealers, imported Brazilian corn is presently priced at roughly CNY 3,000 (~US$449.82; CNY 1 = US$0.15) per tonne, somewhat more than local corn pricing.
Despite unfavourable weather in certain parts of the country, Brazil is anticipated to produce a record corn harvest in 2021/2022.
According to Sergio Mendes, director general of Anec, a Brazilian organisation that represents grain exporters, it will take roughly three months for Brazil's government to adjust phytosanitary rules for exporting maize to China so that shipments may begin.
According to the government, the two countries also reached an agreement on a protocol for the export of thermo-processed beef to China, as well as work on future accords on soy protein and soymeal.