China is likely to take a break from buying large amounts of U.S. corn after record purchases this year because the domestic harvest is approaching and local prices have slumped to the cheapest since late 2020.
The world’s largest importer has already bought more than 10.5 million tons of U.S. corn for the 2021-22 marketing year, and over 23 million tons for the current season, U.S. Department of Agriculture data show. Total imports next year will likely be 20 million tons, according to the USDA’s Foreign Agricultural Service, while the USDA’s official forecast for this year is 26 million tons.
“We don’t expect any more purchases in the short term as the harvest will be available in September and demand is weakening,” said Feng Lichen, chief analyst with industry portal yumi.com.cn. Corn futures on the Dalian exchange have dropped to the lowest level this year with the grain being replaced in animal feed by imported barley and sorghum and local wheat and rice.
The drop in the domestic market and higher shipping costs mean there’s less incentive to buy from overseas. A fresh round of purchases from the U.S. for state stockpiles seems unrealistic, said one industry source. Meanwhile, private companies have already used up their quota allocations, so additional purchases are unlikely before the end of the year, said the source, who asked not to be identified commenting on buying strategy.
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