Plunging Chinese appetite for corn shakes Brazil, US export performance
Sep, 27, 2024 Posted by Gabriel MalheirosWeek 202438
The global corn market has experienced significant changes in 2024, notably a slowdown in Chinese imports and lower-than-expected export performance from Brazil and the United States. According to an analysis by Hedgepoint Global Markets, China’s corn purchasing pace in 2024 has declined significantly compared to the previous year, directly impacting the international market.
Chinese customs data reveals that in 2023, the country imported 8.7 million tons of corn, whereas in 2024, this volume decreased to 3.3 million tons, representing only 38% of the previous year’s total. Brazil remains the largest supplier of corn to China, accounting for 48% of imports, followed by the United States at 44%.
The following chart used DataLiner data to compare Brazil’s corn exports in the first seven months of the past four years. For more detailed information, readers may request a demo below.
Corn Exports to China | Jan-Jul 2021 x Jan-Jul 2024 | WTMT
Source: DataLiner (click here to request a demo)
The reduction in Chinese purchases is directly linked to the country’s supply and demand equilibrium. For the 2023/24 crop year, Chinese production was estimated at 288.8 million tons, a 4% increase over the previous year. For 2024/25, the country is expected to reach a new record of 292 million tons. This strategy, adopted for at least five years, aims to maintain stock levels at a comfortable ratio of 68-69% between supply and use.
Ignacio Espinola, Senior Grains Analyst at Hedgepoint, states that China is awaiting a decline in corn prices due to the expected good harvests in Brazil and the United States. This could encourage the Asian giant to resume purchases at more favorable prices.
Both Brazil and the United States have seen their corn exports slow down in 2024. Up to August, Brazil exported 17 million tons, a 30% decrease compared to the 25 million tons in the same period of the previous year. In the United States, corn exports to China fell 29% from January to August 2024, totaling 2.77 million tons, compared to 4.55 million tons in 2023.
With robust harvests forecast in Brazil and the United States, the corn market is expected to face strong downward pressure on prices to attract buyers. Espinola highlights that the current scenario indicates that China will not import as much corn as in 2023, while exports from Brazil and the United States will also fall short of expectations.
This increase in global supply, combined with weaker demand, should keep corn prices low. However, some signs of market recovery may emerge as investment funds begin to cover their short positions, which could indicate an expectation of higher prices in the near future.
Source: Agrolink
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