China’s combined grain imports are forecast to hit a record high in 2020/21, stimulating the grain trade and driving up prices at a time most other commodities are struggling with the impact of covid, according to a U.S. Department of Agriculture (USDA) report.
The rise in demand is supported by a strong recovery in consumption of coarse grains by the swine sector, which in the recent past had been hit by a disease outbreak.
Corn prices in the domestic market have rallied since February, and in October, the national price averaged around $362 per ton, the highest since August 2015. Greater imports are primarily driven by corn.
The surge in corn imports is indicated by China Customs Statistics and U.S. Grain Inspections data through early November. Imports are likely to far exceed a quota of 7.2 million tons for 2020, though so far there has been no official word about a higher quota.
China wheat imports of 8.0 million tons in 2020/21 are forecast at their highest level in 25 years as State Trading Enterprises are helping bolster domestic stocks and taking advantage of competitively priced foreign supplies.
“The price spread between the average domestic price and import price was approximately $70 per ton in September, accounting for over one-fifth of the total domestic price. China is taking advantage of this arbitrage opportunity to help replace and rebuild ageing government reserves,” says the USDA report.
It adds that China is expected to export less grains with more of its old-crop supplies expected to meet the strong domestic feed demand rather than expanding to additional foreign markets.
China follows a self-sufficiency policy wherein most of its grains are consumed in the domestic market.