Storm brewing as China reviews corn import options after Ukraine loss

China turns to US corn supply to make up for the loss from Ukraine corn supply following country’s invasion by Russia

A USDA private exporter sales note confirming the sale of another 1.09 million tonnes of US corn into China has raised expectations that the Asian importer is turning to US supply to help plug the loss of supply from Ukraine, following the country’s invasion by Russia.

Confirmation of another sizeable purchase - the fourth this month - has re-opened debate over China’s import options, and prompted trade sources to warn that the country may yet need to ramp up its supply as it did in 2020.

The USDA’s daily sale reporting system confirmed 476,000 tonnes sold from the 2021-2022 marketing year and another 612,000 tonnes for 2022-2023 delivery on Thursday, April 28.

The announcement confirmed rumors that had been circulating earlier among market sources that up to 1 million mt of US corn had been traded to China for July-September loading as the country tries to cover Ukrainian supply.

China has raced to the top of the global list of corn importers, and imported just under 8 million tonnes of Ukrainian corn in the 2021 calendar year, according to the Agricensus Export Dashboard.

However, the Russian invasion has curtailed exports, with Ukraine’s major export ports blockaded and in some cases suffering extensive damage over the last two months.

The buying also comes after a period of steady Chinese purchases each week through April, taking the amount sold during the month to nearly 3.5 million tonnes even before the latest 1.09 million tonnes announcement landed.

“Old crop Ukrainian business was canceled. And they had to buy... one way or another,” a trader said.

China has traditionally bought Ukrainian corn for March, April, May delivery, and trade sources have estimated that around 4 million tonnes of corn had been booked from Ukraine’s ports through that period of 2022.

Collectively, China’s April purchases now total 4.54 million tonnes.

Impact of invasion on Ukraine’s ports

But as all deep seaports are currently blocked amid the Russian occupation, it is impossible to load the volume during the period and impossible to load the panamax vessels that typically ply that route.

Currently, Ukraine’s total exports through all the possible remaining export points amounts to around 800,000 mt per month, according to customs data - with much of that now reliant upon rail.

As such, Chinese buyers have to look elsewhere to find other origins to cover the loss.

Besides turning to US corn, China has also opened its gates to corn imports from Myanmar, with the volume bought in through March surging - from a low base - by 640% versus the same point of 2021 to 16,408 mt, according to customs data.

Storm brewing

However, the level of corn imports from the Southeast Asian country won’t offset the loss of Ukraine, as the world’s top corn importer was estimated to bring in 20 million tonnes during the 2021-2022 marketing year, according to the forecast by the agriculture ministry.

“I suspect there will be additional purchases for 2021-2022 still to come. Just like in soybeans - China has little coverage for June-Aug, as well as Sep-Jan. There is still a lot of work to be done… A storm is brewing and the world’s consumers need to wake up,” one broker said.

That shortage has also renewed rumors about the possibility that Brazilian corn could finally be allowed as an export option for China within the next month.

However, as one of the world’s biggest exporters of corn, the rumor has been in the market for many years, but the two countries have failed to iron out agreements around phytosanitary checks.

“The import and deal would not happen immediately, as it requires Brazil to work on their procedure actively, and some following procedures like enterprise filing still needs time,” a China-based analyst told Agricensus.

“Once the import has passed the checks on GMO and completed some filing procedure, (China) would like to buy corn from Brazil,” he added.

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