Falling prices have sparked a flurry of Chinese purchases of U.S. corn, as the world’s top buyer of the grain scrambles to make up for a slow start to its import program, traders and analysts said.
U.S. corn futures Cv1 fell 7.3% during February and hit a seven-month low on March 10, before China began its buying spree. The price drop, combined with uncertainty about exports from rival supplier Ukraine and improved shipping conditions along the Mississippi River, made U.S. supplies the most attractive to Chinese buyers.
A deal to export Ukrainian grain from the Black Sea was extended this month, but Kyiv and Moscow differ over how long the extension will last.
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“We’re the big game in town,” Jack Scoville, analyst at Price Futures Group in Chicago, said about the United States.
Export sales of U.S. corn to China totaled 2.245 million tonnes in the week ended March 16, the third biggest weekly total on record, USDA data show. Since then, Chinese buyers have booked deals for another 832,000 tonnes of corn.
Since the start of the 2022/23 marketing year in September, China has committed to buy just 7.637 million tonnes of U.S. corn. That compares with 12.123 million tonnes in the comparable period a year earlier.
For the entire 2021/22 marketing year, China bought 14.592 million tonnes of U.S. corn, about two-thirds of their total imports.
With Argentina’s crop potential severely reduced by a devastating drought, traders said the U.S. will remain the dominant supplier for China until Brazil’s second corn crop, or safrinha, is harvested in June.
China, which imported just 7.58 million tonnes of corn in the 2019/20 marketing year, previously relied on domestic production to meet local demand. It quickly stepped up imports as soy production became a bigger national priority, said Darin Friedrichs, co-founder of Sitonia Consulting in Shanghai.
Source: Reuters (Additional reporting by Cassandra Garrison in Mexico City and P.J. Huffstutter in Chicago; Editing by Bill Berkrot)