Despite current issues, China 'hit for the cycle' in 2014

By USGC | August 22, 2014

Despite all of the current challenges surrounding imports for feed ingredients, China has accomplished a feat never before seen in agricultural exports. Acording to Chinese customs and USDA data, China has imported more than 3 million metric tons each of U.S. corn, sorghum and distiller’s dried grains with solubles for this marketing year, which ends Aug. 31.

Based on the rapid pace of China’s corn purchases at the beginning of the marketing year, few people would have thought the most challenging component of this three-part purchasing record would have been corn imports. But following China’s Nov. 13 announcement of zero tolerance for Syngenta’s MIR 162 trait, China’s corn imports from the United States ground to a halt. 

However, the slowdown in corn imports contributed to a surge in sorghum imports. This year, China is forecast to take more than 30 percent of U.S. sorghum production, making it by far the single biggest user for the grain. The U.S. Grains Council has actively been promoting sorghum in China, due to the fact that it is not subject to a tariff rate quota restriction, like corn. 

Despite all of the complexities surrounding China’s feedstuff needs, one thing remains constant: end-users love the quality and value of imported feed products. Huge import margins remain for corn, sorghum and DDGS due to high domestic price support policies. Despite several years of production increases and a record crop last year, corn prices in China continue to rise. Additionally, the demand for high-quality corn continues to outpace available supply. According to the most recent USGC data, theoretical import margins into southern Chinese ports now stand at almost $180 per ton. 

USGC staff members are working tirelessly and creatively to find a solution to recent trade disruptions regarding corn and DDGS. Despite the current issues, it is important to stay focused on aggregate demand and to acknowledge the important landmark of China taking than 3 million tons of these important products. 

“Factoring in China importing 7.5 million tons of U.S. soybeans last month, if this were baseball, you could say China has ‘hit for the cycle,’ getting a single, a double, a triple and a home run in the same baseball game,” said Kevin Roepke, USGC director of trade development in China. “The demand is clearly there. This is quite a historic moment, especially when you consider all of the challenges.”