Just a year after China approved Brazilian corn imports, Brazil has surpassed the United States as the main corn supplier to China, according to China Customs.
By November, Brazil’s exports to China reached 8.79 million tons. This accounts for 40% of China’s total corn imports of 22.18 million tons.
In contrast, the U.S. provided nearly 30%, less than half of its previous year’s contribution.
China’s shift to Brazilian corn follows its strategy to diversify suppliers. Previously, it relied heavily on the U.S. and Ukraine.
Brazil’s record-breaking corn production coincided with this change. China’s corn imports have consistently surpassed 20 million tons for the past three years.
This is due to the need for replenishing stocks and high demand for animal feed.
Cherry Zhang, an analyst at Shanghai JC Intelligence, attributes Brazil’s success to its large harvest and competitive prices, writes Bloomberg Linea.
She also highlights the strong trade relations between Brazil and China. Early in the year, Chinese traders ordered large quantities of Brazilian corn, which are now being delivered.
November saw record-high corn imports in China, the most since data collection began in 2005.
After signing a purchase agreement with Brazil last year, China’s imports from Brazil are expected to remain high into 2024.
Grain producers are under pressure to sell
However, falling corn prices in Chicago and logistical challenges in Brazil might shift the focus back to U.S. exports.
In this market, exporters are facing a downturn. Corn futures in Dalian’s commodity exchange dropped 18% in 2023, hitting a three-year low.
Similarly, in Chicago, prices decreased by 30%. Holly Futures, a Chinese brokerage, reports a pervasive market pessimism.
Grain producers are under pressure to sell, while traders are cautious about stockpiling.
This situation is exacerbated by declining profits in China’s livestock and poultry sectors, major consumers of corn. The future demand for corn in China is currently uncertain.