China’s Corn Obsession
China appears to be using the Pac-Man strategy for buying corn. It’s pretty simple… Gobble up everything in sight.
By the numbers:
- In the 2020-2021 marketing year (ends on Aug. 31), China has agreed to purchase 22.8 million tonnes of U.S. corn. 56% of that had already been shipped by May 13.
- New crop corn is where things have really heated up. China has already purchased 10.7 million tonnes of corn for the 2021-22 marketing year, which doesn’t even start until September 1.
- Of that 10.7 million, 8.2 million tonnes of corn has been booked since May 10, marking a historic pace of U.S. export sales.
China is typically a picky price buyer in the global markets, but with U.S. corn prices holding strong at levels not seen in years, something has obviously changed.
And it’s a pretty simple explanation. China needs corn and wants to be first in line to get it.
Plus, this: The struggling Brazilian corn crop. Conditions for their second corn crop have been extremely dry, and there isn’t much relief in sight. Some in the industry think there could be 10 million tonnes of production lost in the next two weeks. With a U.S. corn crop starting the season with historic levels of drought in some areas, China isn’t waiting to see how the markets play out.
Worth noting: China expects to see their hog herd reach pre-African Swine Fever (ASF) levels by July, with slaughter rates back to pre-ASF levels by November. And those pigs gotta eat.
If the herd build-backs are true, don’t expect China’s Pac-Man strategy to go anywhere anytime soon.