China Made Its Largest Corn Buy Since May, and It May Be Just the Start

China came in with a major buy to start the week. USDA confirmed in its daily export sales report that Beijing purchased 1.084 million tonnes of U.S. corn marking the biggest buy since May of 2021.

Of the 1.084 million tonnes China purchased, 676,000 is old crop. Another 408,000 is for new crop. Samuel Hudson of CornBelt Marketing says the purchase had been rumored, but the big Monday buy still caught traders by surprise. And he thinks it could be just the start. 

"I think the market was a little taken back by it in the sense that we've been talking about the situation for Ukraine, you're coming out of a weekend, but the purchase has been rumored for 30 or 45 days about China potentially doing some foreign business," says Hudson. "Given the timing, I think a lot of people suspect that this could be just the beginning of a trend potentially, with them trying to fill some of the last Black Sea supplies due the Ukrainian conflict."

Hudson says while the corn sale to China confirmed on Monday is the largest since May of 2021, he points out it's a mix of both old crop and new crop. Hudson calls the purchase "symbolic"

"The Chinese purchase is certainly significant from our standpoint, because we don't see this real often, and it could be the changing of a trend," says Hudson. "I think it also just underscores our current environment here, where the potential for raw materials, the desire for them, the need form, could exceed morality. And obviously, there's not much of that going on in Russia right now."

As the world waits to see how the ongoing crisis in Ukraine plays out, there are questions about Ukraine's exporting capacity. New reports show ports possibly damaged, which could prohibit Ukraine's ability to export key commodities like corn. It's another factor that underpins an already tight scenario. 

Allendale's Rich Nelson shared a chart on Twitter showing China's corn buys since September. He cites as of the end of last month, China had booked just over 12 mt of U.S. corn for this marketing year. When you add in the latest flash sale from Beijing, China now booked 12.8 million.

As of 3/24 China had 12.1 mt of US corn booked for this marketing year. They now have 12.8 booked with today's 676,000 tonne, 27 mil bu, old crop purchase. A portion of the 3.4 mt for Unknown is also China. pic.twitter.com/UeIlCypbeG — Rich Nelson (@RichNelsonMkts) April 4, 2022

Fewer Corn Acres in 2022

The large buy hit just days after USDA’s March 31 Prospective Plantings report produced some shockers. That's as farmers revealed their planting plans this year, showing fewer corn acres in 2022. 

"That's another thing that's peculiar about this, is this Chinese sale comes on the heels of that report," says Hudson. "Things were already going to be kind of stuck going into this crop year. But the fact that we've printed in at 89.5 million acres, leaves very little breathing room. So maybe this is also a signal that they're trying to get ahead of any potential problems in the spring.

USDA’s report Thursday showed:

• Corn acres at 89.5 million acres, down 4% from 2021
• Soybeans acres at 91 million, up 4% from 2021
• All wheat acreage hit 47.4 million, up 1% from 2021
• Cotton saw the largest increase with acres at 12.2 million, up 9% from 2021