China is expected to remain the main grain buyer

China has doubled its grain purchases in 2021, helping to boost grain markets, but what does this year hold?

Dan Basse, president of AgResource Company, thinks more of the same.

China imported a record 65 million tonnes of grain last year, according to customs data published by the Dim Sums blog.

That’s about double the amount the country bought in 2020 and triple the 10-year average.

The surge was led by 28.3 million tonnes of maize imports, up from the previous record of 11.3 million tonnes in 2020.

This is nearly four times China’s annual tariff rate quota (TRQ) for corn of 7.2 million tonnes. Thus, buyers still imported the crop despite the fact that they had to pay a high tariff.

They also bought 9.77 million tonnes of wheat, up 17% from 2020 levels and 12.48 million tonnes of barley, an increase of 55%.

There has been speculation that China is simply rebuilding its depleted grain reserves and that purchases will decline in 2022, but Basse doesn’t think so for several reasons.

He noted that the country’s pig herd has been rebuilt to pre-African swine fever levels.

“You have the dynamic of more mouths to feed,” Basse said.

But more importantly, the government banned giving table scraps to pigs, which was a common practice.

He estimates that 35 million tons of food waste ends up in food rations every year. This practice has mostly ceased.

“Although I’m sure sometimes someone throws their dinner out the back door,” Basse said.

He estimates that 20 to 25 million tons of imported maize are used each year to replace these table scraps. This contributes to a “bullish landscape” for the culture.

“That will prevail for another two or three years at a minimum, at least until we achieve another 20 to 25 million acres of production in the Black Sea and South America,” Basse said.

MarketsFarm analyst Bruce Burnett agrees demand is there in China, but he doesn’t think this year’s grain imports will reach 2021 levels.

“They will probably import a little less just because their crops were better last year,” he said.

Burnett does not expect a return to historic levels of around 20 million tonnes. It will be much more substantial than that, but probably not in the territory of 65 million tonnes.

He noted that imports had started to decline a bit in the last half of 2021.

Much will depend on how this year’s harvest develops. The wheat harvest falls in about a month and corn will be harvested in September and October.

Burnett said there are no red flags in terms of weather at this time.

Basse said it’s impossible to know for sure what’s done with the corn and wheat once they arrive in China.

However, he strongly believes that there is a shortage of commodities and they are consumed rather than stockpiled.

Corn futures prices on the Dalian Commodity Exchange closed at $11.14 a bushel. On January 25, not far from the all-time high of $11.21.

China’s grain imports soared in 2021 to 65 million tons. Dan Basse, president of AgResource Company, expects repeat performance in 2022 due to a rebound in the hog herd and new feed regulations. | Source: Dim Sums Blog

This is despite the fact that China supposedly harvested a record 272 million tonnes of the crop and auctioned off an additional 80 million tonnes of corn, wheat and rice reserves.

This is a strong indication that the country is consuming far more of the crop than it is producing, which bodes well for demand in 2022.

“It doesn’t look like it’s one and done,” Basse said.

Contact [email protected]

About Marco C. Nichols

Check Also

The ‘Corn Kid’ just became a cornfluencer

Vegetables, whole grains, fruits and now a viral star with its own official ambassador. Of …