MGEX analyzed China’s domestic consumption of soybeans, wheat and corn dating back to the 2000-2001 marketing year. China’s domestic soybean consumption is ranked first in the world and ranks second in the world in domestic wheat consumption behind the number European Union. China is second to the United States in domestic corn consumption.
Recently, China stated it will control speculation within its grain and oilseed futures sector, control food inflation and also discussed importing corn from Argentina.
Thus far China has not officially agreed to import corn needs from Argentina. Nor has it done anything about raising interest rates or controlling speculation within its futures industry.
In recent discussions with Argentina, China stated it may approve as much as five to eight million tonnes of corn imports (197-315 million bushels) in the March to July 2011 timeframe. A Chines official did suggest it may take two years to achieve this task. Thus far only the U.S. Peru and Thailand are able to export corn to China.
With the timing of this dialog between China and Argentina, China has provided its farmers the incentive to plant more corn in 2011 by discussing large imports of Argentine corn.
China domestic consumption of wheat has been flat at best since 2000-2001 marketing year but corn domestic consumption has risen 35% and soybean up 158%.
China’s importation of U.S. soybeans is up 24% year on year and is 31% of its total 2010-2011 imports. These may accelerate or decelerate depending on South America pod fill which usually takes place in late January to early February. This is reminiscent of China’s actions in 2009-2010 when Argentina experienced weather and trade issues.
MGEX does not forget the U.S. exports of distillers dried grains into China of 1.928 million tonnes, up 256% year on year and the 2010-2011 U.S. export sales to China of 313,600 tonnes of corn.
In conclusion be aware of the timing of these announcements as well as weather in South America.
MGEX welcomes your questions.........Joe Victor
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