China’s corn imports soared nearly sevenfold from a year earlier to four-and-a-half year high in September as Beijing sought to address a domestic supply shortage and skyrocketing prices with shipments from the United States.
Imports of corn surged to 1.08 million tonnes last month, 675 per cent above the same period last year and an acceleration from the 339 per cent increase recorded in August, according to calculations by the South China Morning Post based on import data released by China’s General Administration of Customs.
September’s corn imports were at the highest level since April 2016, the year the government stopped buying corn at a fixed, low-price for the national reserves and the once oversupplied domestic market became tighter.
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Imports from the US led the way last month, soaring 1,244 per cent from a year earlier, while purchases from Russia and Ukraine also rose dramatically. China even bought 13,973 tonnes of corn from neighbouring Laos, a small producer on its southwest border.
Despite escalating geopolitical tensions and the impact of the coronavirus pandemic, China’s surging imports of US corn show the phase one trade deal between the world’s two largest economies is holding up.
China has bought more than US$23 billion of American farm products so far this year, completing 71 per cent of the purchase target set under the trade deal, according to a joint statement by the Office of the United States Trade Representative (USTR) and the US Department of Agriculture (USDA).
Under the deal, Beijing pledged to buy a total of US$36.5 billion worth of US agricultural goods, up from US$24 billion in 2017, the pre-trade war base year that has been used to measure progress.
By October 15, China had committed to buy a record high of 10.55 million tonnes of farm products from US exporters, according to data from the USDA.
September’s spike in corn imports came as large parts of China, particularly the country’s northeastern corn belt, were battered by rare autumn typhoons and heavy rains.
The wild weather stirred concerns about shortages of the crop, which is widely used in animal feed, and caused domestic prices to hit a four-year high.
The Chinese government, however, has reassured the public there was only limited damage to corn supply from the typhoons.
“Currently, over 90 per cent of the corn harvest is expected to have been completed, so a bumper harvest is a foregone conclusion,” Wei Baigang, chief economist of the Ministry of Agriculture and Rural Affairs, said on Tuesday.
Speculation in both domestic and international markets, the recovery of China’s hog herd from the African swine fever epidemic, and rising alcohol consumption during the coronavirus had pushed up corn prices, Wei said.
Imported corn and alternative crops would soften supply concerns, the agriculture ministry said earlier this month.
Without imports, China’s domestic corn supply would likely have fallen 17.53 million tonnes short of demand in the year to the end of September, with the gap widening further to 23.46 million tonnes in the next 12 months, according to another report from the ministry on October 9.
The USDA has also forecast a corn supply gap in China of 27 million tonnes in the marketing year that began this month.
“China may rely on corn imports and stocks of old rice and wheat [held in reserve] to meet feed demand in the coming marketing year,” the department said early in October.
China auctioned off all its national reserves of corn – totalling 56 million tonnes – early this year to calm prices.
“We predict domestic corn prices will continue to rise in the medium and longer term, as there is a gap in domestic supply and demand,” said a Harbin-based corn analyst at a Chinese futures company, who gave only his surname Xiao due to the sensitivity of the topic.
The analyst said it was unclear how long China’s corn imports would keep growing, but high international prices due to the impact of the pandemic on global food supply could limit Beijing’s purchasing power.
“Some people in the market believe that as long as the corn price rises, the country will increase imports,” Xiao said. “I don’t believe the government will buy foreign corn at high prices to suppress the domestic price.”
The increase in imports might not have an immediate impact on the domestic market because most foreign shipments would not hit China’s market until April or May next year, he added.
The National Development of Reform Commission, the country’s top economic planning agency, has set an annual low-tariff quota volume for corn imports in 2021 of 7.2 million tonnes, unchanged from this year.
This year’s corn import quota has already been used, prompting speculation Beijing will expand next year’s allowance.
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