China is increasing its corn imports, which may increase the demand for Ukrainian corn

Since the beginning of 2023, China has increased its corn imports, which has added optimism to Ukrainian and American exporters, who are suffering from a decrease in global demand and prices.

According to the customs service of the People’s Republic of China, in February, compared to January, the import of corn grew by 41% to 3.1 million tons, and in the first two months of the new year, in total, it amounted to 5.3 million tons, which is 14% higher than the corresponding figure last year.

In addition, during January-February, China imported:

• wheat – 3 million tons (+38% compared to January – February 2022), in particular 1.5 million tons in February,
• barley – 960 thousand tons (-18%, 460 thousand tons),
• sorghum – 330 thousand tons (-79%, 120 thousand tons).

The competition for the Chinese market between the main corn exporters will intensify in the second half of the season. Ukraine needs to sell another 6 million tons of corn, and the European market is already oversaturated, so we can only hope for Chinese buyers who can intensify purchases after the continuation of the grain corridor.

Corn exports from the US as of March 16 were only 17.5 million tons, or 37% of the USDA’s forecast for this season. Thanks to the dry and warm weather, corn planting is more active than last year in the country, which could lead to an increase in the planted area and yield forecasts, which will be released by the USDA on March 31.

The USDA’s Economic Research Service noted in its monthly report that “decline in corn exports from the US and Argentina is partially offset by increases from Brazil, India and Ukraine. For Brazil, the export forecast for October-September has been increased by 1 million tons to 52 million tons, which will exceed the export from the United States, which is estimated at 47 million tons.”

May corn futures on the Chicago exchange are trading at $249/t (+3% for the week, -7.5% for the month), which makes them quite interesting for Chinese buyers against the backdrop of lower freight costs.

In Ukraine, the purchase prices for corn remain at a low level of $198-202/t or UAH 7,800-8,000/t with delivery to the Black Sea ports as a result of the artificial delay by Russian inspectors as part of the SCC of vessels to the ports of Ukraine. According to traders, ships are in queue for 30-50 days (and one was idle for 84 days), which leads to additional losses in the amount of $30-35/t and does not allow farmers to receive the market price for grain. At the same time, the Russian Federation refuses to speed up the inspections and insists on extending the agreement for only 60 days, not 120 days, as specified in the document.

Tags: China, corn, prices, imports