Robust corn demand seen from China, other Asian nations

China’s corn imports over this year and the next will be in the range of 15 million-30 million million tons annually with the majority of it being sourced from the US, according to an S&P report.

China has stepped up purchasing corn from the U.S. since July to record levels as it seeks to rebuild its hog population that had been affected by swine flu.

Its Ministry of Agricultural and Rural Affairs in an Aug. 17 report said China’s hog herd grew 13.1% in July, marking the first year-on-year growth in hog population since April 2018. 

The flow of corn into China, Asia’s largest consumer, will also depend on its domestic corn production as the nation is the world’s second-largest producer of corn aft6er the U.S. 

China and the U.S. together account for 55% of global corn production and 51% of the world’s consumption. While the US and Chinese corn production has remained stable over the last five years, output in Brazil, the European Union, Argentina and the Ukraine has surged 48% and now account for 60% of the global market.   

Rising demand

Just five years ago China was self-sufficient in corn, consuming 86% of its domestic production, with little need for imports. By 2020, Chinese demand had grown to 105% of domestic production, with the expectation of increased deficits in years to come.   

Two typhoons in September devastated corn crops in Heilongjiang and Jilin provinces in northeastern China, the largest corn growing region in the country.

Grain production in the three provinces of northeastern China — Liaoning, Jilin and Heilongjiang — account for three quarters of the whole-year grains, and therefore the weather disruption hit domestic supplies.

With China becoming the first major economy to recover from covid, food demand including for corn is expected to be strong.

“We think China’s recovery is broadly on track and we see upside risks to our (economic) growth forecast of 1.2% in 2020 with 7.4% for 2021,” said Shaun Roache, APAC Chief Economist at S&P Global. .  

“Still, consumer confidence remains fragile and retail sales remain soft. Together with rising food prices driven by supply shocks, this is more likely to dampen spending on discretionary items, such as furniture and cars, rather than food, especially food staples,” he added.

Other Asian nations want corn too

Demand for corn from other Asian nations are also likely to remain strong.  
South Korea, which reported the first case of African Swine Fever in September last year, has culled around 153,000 hogs.

Since then, enforcement of a number of security measures have limited the spread of the disease and the country’s feed demand has seen little impact as a result.

COVID-19 movement restrictions have had a greater impact, but the country’s feed demand still appears resilient, S&P adds.

South Korean corn buyers went on a buying spree as global corn markets came under pressure from pandemic restrictions in the first four months of the year, filling November import positions as early as April to insulate against any risks of supply disruptions.

In neighbouring Vietnam, African Swine Fever took a much bigger toll, resulting in culling of 20% of the hog population. However like South Korea, importers adopted a strong buying stance at the start of the year when corn prices were at historical lows. 

The early buying resulted in an almost 89% year-on-year jump in corn imports to 1.44 million mt in July, Vietnam customs data showed. Imports over JanuaryJuly rose 9.8% on year to 5.86 million mt.  

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