Long-term corn bulls have based their projections on the expectation that China will become a major importer of the feed grain.
However, record corn stocks in China and a change in the U.S. Department of Agriculture’s long-term projections are shaking the foundation of that belief.
The U.S. Grains Council and others have for years believed that China does not have the agricultural resources needed to keep up with its rising demand for corn, which is connected to its rising demand for livestock production.
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When China’s corn imports jumped to 5.2 million tonnes in 2011-12 from less than a million the previous year, it appeared to confirm the belief that it was only a matter of time before the Asian giant was importing tens of millions of tonnes.
However, that didn’t happen. Imports have ranged from 2.5 million to 3.3 million since then.
China has consistently raised its corn production in recent years to new record highs, and stocks have risen to a record 79.2 million tonnes this year, up from 50 million in 2010.
American traders believe the im-port restrictions that China implemented last year over traces of an unregistered genetically modified corn variety have more to do with surplus supply than concerns about GMOs.
Now, the USDA in its annual 10 year agricultural projections released Feb. 11 has cut its forecast for Chinese corn imports.
Last year it forecast that China’s corn imports would be 22 million tonnes by 2023-24.
This year it dropped its forecast by 15 million tonnes to 7.2 million, noting the large build up of stocks.
However, the USDA bumped up imports by other countries so the forecast for global 2023-24 corn trade dropped by only 4.8 million tonnes compared to last year.
The USDA thinks corn, wheat and soybean prices will recover only slowly from the sharp drops of the past year and remain well below the highs of the 2007-13 period.
Here are other highlights from the USDA’s long-term projections.
World coarse grain trade is projected to increase by 23.8 million tonnes, or 15 percent by 2024-25, the USDA projects. Exports from Brazil and the former Soviet Union capture a lot of the new business.
Annual world wheat trade, including flour, is projected to expand by nearly 24.5 million tonnes, or 16 percent, in the period, reaching 180 million tonnes. Countries in Africa and the Middle East as well as Indonesia and Pakistan account for most of the demand increase.
The former Soviet Union captures most of the new business.
The USDA thinks Canadian wheat acreage will decline over the period as growers turn to more profitable crops, including canola.
Soybeans continue to be the star among the big crops.
Global soybean trade is projected to increase by 28 percent, soybean meal trade by 17 percent and soybean oil trade by 23 percent.
The rise in soybean trade is almost all driven by Chinese demand, which is forecast to grow to 107.7 million tonnes in 2024-25 from 76.7 million. Brazil is expected to capture much of the increased business.
