China posted strong corn imports for September while November hog futures on the Dalian Exchange have posted a 23.3% increase since end-September to date.
China imported 3.53 million mt corn in September, up 227% year on year, according to the country’s customs data.
The US was the top exporter to China at 3.34 million mt in September. China’s total imports from January to September was at 25 million mt, up 274.5% year on year, the data showed.
Market sources expect imports to be in the 28 million-30 million mt range for 2020-21.
Meanwhile, hog futures have recovered from its low of Yuan 11,480/mt on Sept. 30 to Yuan 14,150/mt on Oct. 20. Since hog futures started trading this year, prices have plunged more than 50% as swine herd repopulation efforts started paying off.
The livestock industry is a major consumer of corn feed.
The Chinese domestic corn harvest is ongoing and reports of fresh purchases have been thin amid a bumper crop.
The Chinese Agriculture Outlook Committee, known as CASDE, forecast domestic corn output at 270.96 million mt for 2021-22 (October-September), up from 260.67 million mt in 2020-21, as previously reported by S&P Global Platts.
The CASDE import forecast is at 20 million mt for 2021-22, while Platts Analytics sees Chinese corn imports to be 21 million-22 million mt based on CASDE production estimates.
Although corn imports forecast for 2021-22 was lower than 2020-21 imports, the possibility of imports rising could not be ruled out as wheat prices in the local market are now trading above corn.
For the first time since November 2020, corn prices in China are now below those of wheat in the local market.
Generally, wheat is more expensive than corn. However, a big supply deficit in the local corn market boosted prices of the product in China in 2021. The government responded by releasing wheat stocks from reserves as a proportion of corn can be replaced with wheat in livestock feed ration.
China sold 27.79 million mt of wheat as of May 6 in the government auctions conducted in 2021, already surpassing the 23.23 million mt sold in the whole of 2020. Corn prices began to cool off as imported corn and wheat entered the market.
However, corn imports in 2021 have remained strong despite the robust substitution in feed ration.
With the price difference between corn and wheat narrowing, use of corn could return to the usual levels.
Source: Platts