07.09.21 | Newsletter
CoBank issues report on China’s buying tactics
According to a June report from CoBank’s Knowledge Exchange, the outlook for continued U.S. grain exports to China remains strong, primarily due to its projected growth in pork production and steady demand for feed grains. However, CoBank said China is leveraging the current volatility in U.S. grain prices to its advantage.
“China will remain an active buyer of U.S. grain through at least the 2021-22 marketing year,” said Kenneth Scott Zuckerberg, lead grain and farm supply economist with CoBank, in a press release announcing publication of the report. “But the increased volatility in grain prices has led China to shift its buying pattern to wait for price weakness before committing to additional purchases, as well as to contract now for the next marketing year.”
So far in 2021, the U.S. has exported 57.1 million metric tons (MMT) of soybeans, corn and grain sorghum to China, which is a dramatic increase compared to the 15.5 MMT China purchased over the same period in 2020 and 7.9 MMT purchased in 2019. Also, China has already contracted for 10.7 MMT of new crop corn and 3.0 MMT of soybeans to be delivered after harvest and recorded during 2021-22 crop marketing year.
“Barring cancellations, these orders lend confidence that U.S. feed grain exports to China will continue to be strong during the next six months,” said Zuckerberg.
Since May 2020, China has aggressively purchased soybeans and corn as feed to rebuild its domestic swine population following an outbreak of African Swine Fever (ASF). While hog slaughter in China declined in 2019 and 2020 due to AFS and COVID-19, slaughter is expected to increase in 2021, CoBank said.
“The combination of steady pork production, higher slaughter rates and currency tailwinds suggests the Chinese appetite for U.S. feed grains will remain strong,” said Zuckerberg.
Read the full report.