Home / Commodities / Commodity News / Ample supplies in Chinese corn market to weigh on global prices

Ample supplies in Chinese corn market to weigh on global prices

A large domestic corn crop and surging imports from Brazil are set to flood the Chinese market in coming weeks, reducing demand for other grains and pressuring global corn prices already near three-year lows, analysts and traders expect.

The world’s No. 2 corn producer has begun its harvest, with output likely to surpass last year’s total, even after the summer’s typhoons damaged crops in some northern provinces.

A drop in prices will exert pressure on U.S. farmers but benefit Chinese livestock farmers who feed corn to the world’s biggest herd of pigs and have been losing money for most of this year.

China’s agriculture ministry has forecast a record 285 million metric tons for the 2023/24 crop year, up 2.9% on last year’s 277 million tons. Shanghai JC Intelligence Co Ltd estimates production of 269.5 million tons while United States brokerage StoneX projects around 280 million tons.

The heavy rain raised soil moisture and boosted growth in parts of the northeast, analysts said, helping to offset losses in other locations and lift overall output.

“The overall weather conditions this year were significantly better than previous years with high temperatures and rainy weather,” said Ma Wenfeng, an analyst at Beijing Orient Agri-business Consultant.

China’s harvest will coincide with large arrivals of corn from Brazil, approved for import by Beijing late last year.

Some 254,027 metric tons arrived from the South American nation in August, according to Chinese customs. LSEG estimates another 578,000 tons were shipped from Brazil in August, and 1.22 million tons this month.

JCI expects China to import 20 million tons of corn in the 2023/24 season, with a third from Brazil, compared with 18 million tons the prior year.

Feed makers have also snapped up some Australian barley, offered at a discount to Chinese corn when anti-dumping duties were lifted last month.

“We have some barley coming in from Australia but not too much. The (corn) harvest is expected to be good, and prices will go down,” said a manager with a major Chinese feed producer, declining to be identified due to the sensitivity of the topic.

Barley prices are currently not attractive, however, and buyers are switching back to corn, said Nick Orssich, vice president, Ags, APAC, at StoneX.

“Together with large incoming arrivals, corn supply is much higher than domestic consumption. The price of corn is expected to drop after the new grains enter the market,” said Ma of Beijing Orient.

The November corn futures contract on the Dalian Commodity Exchange DCCcv1 has dropped 5% this month to 2,602 yuan ($355.82) per ton.

Swelling inventory of grain in the world’s top buyer will also weigh on benchmark Chicago corn futures Cv1, already close to three-year lows on expected bumper world supplies.

Farmers in the United States have started harvesting their second largest crop on record, adding to plentiful corn from South America.
Brazil is set to out-ship the U.S. for just the second time ever this season, and attractive prices of about $270 per ton for December shipment means China is still buying, traders said.

The quality of the upcoming harvest is also not yet clear.

“It is still early in the harvest. And both Black Sea and South American corn are cheaper than China’s local corn,” said a Singapore-based trader at an international trading company which supplies feed grains to China.

“As far as imports are concerned, Chinese buyers are continuing to take imported corn,” he added.
Source: Reuters (Reporting by Mei Mei Chu and Dominique Patton in Beijing, and Naveen Thukral in Singapore; Editing by Jacqueline Wong)

Recent Videos

Hellenic Shipping News Worldwide Online Daily Newspaper on Hellenic and International Shipping