China: Corn Industrial Use Shines, Feeding Takes a Hit

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In the most recent USDA Foreign Agricultural Services (FAS) China Grain and Feed Annual Report, marketing year 2019/20 corn consumption was estimated at a record high 282 million tonnes, up from 279 million in 2018/19. A decline in feed use due to African Swine Fever was more than offset by an increase in food, seed and industrial (FSI) use. FSI consumption was estimated at 90 million tonnes, up 5 million tonnes from the October forecast and quietly up almost 6 percent since 2017/18.

Year-to-date corn loadings from all origins have totaled 1.4 million tonnes to China, which is up 6 percent from the same period last year. Chinese customs released March 2019 imports of 420,000 tonnes vs. Clipperdata figures of 447,000 tonnes. April loadouts so far this month have totaled 360,000 tonnes, which is in line with April 2018 levels of 379,000 tonnes.

Loadings should stay firm into August and tail-off thereafter once the domestic harvest begins. May to August 2018 offtake volume was near 1.9 million tonnes. Of note, the Port of Guangdong to the south and Port of Rizhao to the north have seen the bulk of the volume for unloading.

While Chinese demand looks to be stronger year over year, the US will not be the sole beneficiary although a trade deal between the US and China could temporarily interrupt this situation with a one-time corn purchase or a volume commitment over a multi-year time-frame. Given the country’s dependence on corn, there are now fourteen countries permitted to export grains to China according to FAS. Uruguay was the most recently approved origin for corn market access.

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Ukraine remains the dominant supplier, with 2018 loadings around 3 million tonnes and 2019 around 750,000 tonnes so far. It was recently announced by the USDA that the US sold 300,000 tonnes of corn to China for the 2018/19 marketing year, although we have only seen 30,000 tonnes shipped in 2019. The USDA forecast for Chinese imports of corn sits at 5 million tonnes and there is little evidence to suggest this forecast should change in the near-term.

For more information on the most comprehensive global grain trade flow data in the industry: