According to the forecasts of global analysts and traders, a large corn harvest in China and a rapid increase in grain imports from Brazil will saturate the Chinese market in the coming weeks, reducing demand for other grains and lowering world corn prices, which are already approaching a three-year low, Reuters reports.
As for the harvest, it is noted that China has begun harvesting corn, which is likely to exceed the total figure of last year, even after summer typhoons damaged crops in some northern provinces. China’s Ministry of Agriculture forecasts a record 285 mln tonnes of corn in 2023/24 MY, up 2.9% from 277 mln tonnes in the previous MY. The analysts of Shanghai JC Intelligence Co Ltd estimate the production of the grain at 269.5 mln tonnes, while the American brokerage StoneX forecasts about 280 mln tonnes.
It is also noted that, according to the analysts of Beijing Orient Agri-business Consultant, in general, the weather conditions in China this year were much better than in previous years, with high temperatures and rainy weather.
It is worth noting that the harvest in China coincides with the arrival of large quantities of corn from Brazil, the import of which was approved by China at the end of last year. Thus, according to Chinese customs, in August of this year, the South American country imported about 254 thsd tonnes of corn. According to LSEG estimates, in August, another 578 thsd tonnes were shipped from Brazil to China, and this month – 1.22 mln tonnes. JCI expects China to import 20 mln tonnes of corn in the season 2023/24, with one-third coming from Brazil.
The price of corn is expected to decline after the new harvest hits the market
In addition, it is noted that the decline in corn prices will put pressure on farmers in the United States, but will benefit Chinese livestock producers. According to analysts of Beijing Orient, along with a large inflow of imported grain, the supply of corn significantly exceeds domestic consumption. The price of corn is expected to decline after the new harvest hits the market.
It is worth noting that corn futures for the November contract on the Dalian Commodity Exchange fell by 5% in September to 2602 yuan ($355.82) per ton. The increase in grain stocks in China will also affect corn futures on the CBOT, which are already approaching a three-year low amid expected significant global supplies.