China could start importing corn from Brazil in December as part of a move by the world’s largest buyer to reduce its dependence on the US and replace supplies from Ukraine cut off by the Russian invasion.
About 45 facilities from companies, including Bunge Ltd., Cargill Inc., and Archer-Daniels-Midland Co., have been pre-approved by Brazil to export to China, according to a list by Bloomberg.
The final total will be higher because of the large number of applications, said a person familiar with the matter, who asked not to be identified as talks continue.
The final list is likely to be sent to China in November.
China is taking steps to accelerate imports of Brazilian corn, diversifying supply when the war in Ukraine has disrupted trade and tensions with the United States are high.
The more than 20% rise in Chicago corn futures in less than three months, exacerbated by the rising dollar, has increased the urgency to find alternative cargoes.
China is also curbing corn starch exports, a sign that the country is concerned about supply.
US agricultural giants Archer-Daniels-Midland Co. and Bunge Ltd. fell as much as 2.9% on the news before recovering.
Although Brazil is the world’s second-largest corn exporter, China has hardly bought from this agricultural powerhouse for the last nine years for phytosanitary reasons.
At a meeting in Brasilia this year, the two countries finally agreed on sanitary guidelines after years of talks, paving the way for purchases.
The move threatens the US share of Chinese purchases, which accounted for about 70% in the 2020-2021 season.
Bunge leads the list seen by Bloomberg with 20 sites approved by Brazil to export corn to China.
Once Beijing approves the list, those companies will negotiate directly with buyers from the Asian country.
China already buys most of Brazil’s soybeans, another feed ingredient for its vast hog herd.
The Asian nation has a history of pulling away from US agricultural supplies at a time of escalating tensions, such as in 2018-19 during a trade war, and has a broader goal of reducing dependence on a single supplier.
With information from Bloomberg