Will China’s booming food imports continue their run?

Canada moved 1.156 million tonnes of wheat to China from June to September for a total revenue of $389.5 million, compared to 1.044 million tonnes shipped by the United States.  |  File photo

China is hungry for imported crops and meat and even with our diplomatic tensions Canada is helping supply what the Asian giant wants.

Much has been made of China buying American crops to meet its commitments under the phase one trade deal signed in January.

But in wheat trade, Canada through the summer actually shipped more to China than did the United States.

Statistics Canada last week released trade figures for September and they show that in the four months June to September Canada moved 1.156 million tonnes of wheat to China for a total revenue of $389.5 million.

In the same period, the U.S. shipped 1.044 million tonnes.

China was the biggest monthly buyer of Canadian wheat in June, July and August.

In September Nigeria bought slightly more at 195,716 tonnes to China’s 193,467 tonnes, but the revenue from China was greater at $62.9 million, versus Nigeria’s $56.97 million.

China’s food imports are the top demand story early in the 2020-21 crop year.

In a September column, I noted a report from the China Academy of Social Sciences that warned China would see massive increases in grain imports in the next few years if there is not a major rural restructuring to address a rapidly aging country workforce and lack of enthusiasm in growing grains.

We’ve also reported on its huge meat imports made necessary because of the devastation caused by African swine fever.

China’s food inflation soared earlier this year, mostly on the back of rising pork prices and was still high in September, up almost eight percent from a year ago.

In response, Chinese president Xi Jinping in August launched a “Clean Plate” program to wage war against food waste.

All this raises questions about whether China just had a couple of bad years or is it really headed toward long-term food insecurity.

While the future is uncertain, the immediate situation has been good for Canadian food exporters.

The Chinese, of course, traditionally import huge volumes of oilseed but not much grain. But this year they are importing wheat, corn and barley at a pace much higher than usual.

China’s customs figures show that in September alone, the country imported from all sources 1.07 million tonnes of wheat, up 585 percent from the same month last year. Barley imports totalled 1.34 million tonnes, up 57 percent, and corn imports were 1.08 million tonnes, up 675 percent.

The pace of current exports and the future sales already on the books for later this year, as well as the high price of domestic corn in China, indicate that the situation on the ground is vastly different from what the U.S. Department of Agriculture has traditionally published in its world supply and demand reports.

Its estimates of gigantic grain stocks in China no longer hold true.

But setting aside the stock estimates, the USDA also faces particular criticism for sticking to its forecast of Chinese corn imports of only 7.2 million tonnes in 2020-21 when sales already on the books are much higher. The USDA argues that China has a tariff rate quota (TRQ) under World Trade Organization rules of 7.2 million tonnes of corn and so it is waiting for Beijing to issue additional quota.

The U.S. Department of Agriculture will update its monthly world supply and demand numbers on Nov. 10, after this column was written.

Last week, the USDA’s attaché office in Beijing raised its corn import estimate to 22 million tonnes, noting that unofficial sources say the government already quietly issued a quota increase of five million tonnes to the end of December. The attache also said there is a strong domestic lobby to substantially increase the TRQ for 2021.

China’s grain import picture also changed last week with news that Beijing was targeting Australian wheat as a tool to punish it for its criticism of Beijing’s handling of the coronavirus.

It had already suspended barley imports from two major Australian grain companies.

China’s bullying of Australia on barley might be a partial reason for Canada’s strong barley exports.

In the four months June to September, Canada exported 505,615 tonnes of barley to China, with a total value of $101.3 million. By value, that was 53 percent of total barley export sales.

And it was more than double the 214,235 tonnes Canada exported to China in the same period last year.

Of course Canada has its own problems with China that are affecting canola trade, but as it has been since the restrictions began, some canola continues to move to the Asian giant.

Indeed, in the first two months of the current Canadian crop year China was the largest buyer of canola with a huge import in August and a respectable number in September for a total of 377,145 tonnes, according to Statistics Canada.

And if we widen out to look at the last four months, June to September, again China is the largest single importer, taking 826,269 tonnes or 23 percent of the 3.6 million tonnes shipped in the period.

Other major buyers in the same period were Japan with 654,809 tonnes, Mexico 485,753, the United Arab Emirates 393,336, France 284,323, Pakistan 282,661 and Germany 190,940.

China also took the lion’s share of unrefined canola oil exports in the four months.

As well, China has become a major importer of Canadian pork. In the four months China imported $478.6 million of Canadian pork, or 34 percent of the $1.4 billion of total sales in the period.

In total, from January to September, China was the largest importer of Canadian pork accounting for $1.27 billion of sales, an increase of 156 percent over the same period last year.

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