China has been dominating U.S. new crop corn purchases. As of Monday, China has purchased more than 8.5 million metric tons of corn. That’s more than 336 million bushels of corn.
“A lot of people are excited about the amount of corn that China is buying, and if we add that along with all the soybeans they’be been buying, how much of that is going to get shipped this fall?” said Cary Sifferath, senior director of global programs of the U.S. Grains Council (USGC). “We’re elevating grain off the barges into New Orleans or off railcars into vessels in the Pacific Northwest. [It’s] getting tighter and tighter because of all this big business.”
With all of these purchases, some corn growers are hesitant to believe China will follow through, based on past experiences. Sifferath is confident China will fulfill these purchases.
“All of the corn events are approved for importation into China,” he said. “Corn prices inside of China are extremely high—they’ve been auctioning off 4 million tons a week for 13 weeks, so there’s about an $80 to $100 ton spread between imports of U.S. corn into China versus what domestic corn is.”
Pig prices are also quite high as China is rebuilding their hog herd after the ASF outbreak. Farmers have been changing their rations. Sifferath said that is also driving Chinese demand.
“There used to be a lot of restaurant food waste that made its way into the feeding of hogs—tat’s pretty much been outlawed,” said Sifferath. “Even if you wanted to try and sneak it, it’s the fastest way to reintroduce ASF in your herd. These big, more sophisticated farming operations in China that are rebuilding are going to feed only corn or soybean meal diets—no food waste at all.”
Even though Sifferath believes China will ship the product, there is a $80 a ton margin to be made by the Chinese state-run company responsible for purchasing grain.
“There’s huge incentive just to pad your pocketbook into actually bringing this corn into China.”