China’s increased corn imports from the USA, which was mainly for the reason that Chinese corn supply may be tight in Q2 2017.
In April 2016, the purchase and sale of corn harvested in 2015 came to an end, but auctions of temporarily-stored corn had not started yet. Tight supply caused a rebound in corn prices, and import volumes also hit a record high for that year. According to China Customs, the country imported 1.16 million tonnes of corn in April 2016, 36.5% of the year’s total; import volume in March-May 2016 reached 2.77 million tonnes, 87.4% of the year’s total. Importers perhaps believed that tight supply would occur from the end of Q1 to early Q2 this year, so they increased corn imports in advance.
Corn in South China, especially quality corn, is in short supply at present. This is due to rising transportation costs and declining corn supply in northern China. The price of corn in the south has been higher than the import price. Therefore, the low import price is attractive for downstream traders.
In addition to price factors, Ukraine’s transferring its export destinations for corn was also an important reason. In Oct. 2016-Jan. 2017, the country’s corn export volume to the Middle East rose sharply to 1.90 million tonnes, 23% of its total export volume and up 3.2 times YoY. “Ukraine is actively exporting corn to traditional markets, and exploiting new markets. Iran is very likely to replace China as the main export destination in 2016/17,” said analysts UkrAgroConsult.
Based on past experience, the end of Q1-early Q2 of a year is the peak season for the Chinese corn import market because new corn is sold out while auctions of temporarily-stored corn have not yet started. But changes in corn import volume in the future will be based on the sale of corn stockpiles and the auction situation.