China's corn imports from US set to rise 67.6% in 2024-25 on higher Brazilian prices

China is expected to increase its corn imports from the US by 67.6% year on year in marketing year 2024-25, while reducing supplies from Brazil by 48.8% compared with the previous year, according to the latest forecast from analysts at S&P Global Commodity Insights.

China is the world's largest importer of corn, with MY 2024-25 imports projected at 23 million mt, unchanged on the year, according to the US Department of Agriculture.

China's corn imports from the US for MY 2023-24 are estimated at 3.4 million mt, while imports in MY 2024-25 are forecast at 5.7 million mt, according to Commodity Insights analysts.

Similarly, Chinese imports from Brazil are estimated at 12.9 million mt for MY 2023-24 and forecast lower at 6.6 million mt for MY 2024-25.

China is actively pursuing its ambition of reaching a balance between its corn production and domestic demand, thereby stopping imports of the grain within the next 10 years, sources told Commodity Insights.

The Chinese Agricultural Ministry forecasts China's corn imports in the 2024-25 crop year at 13 million mt, 10 million mt lower than the USDA.

"While we believe a drop to 13 million mt next year is a low probability scenario, we do not rule it out," Paul Hughes, chief agricultural economist at Commodity Insights said.

Chinese corn imports forecast, long term versus short

China's corn import trend for the coming marketing year compared with long-term forecasts present a contrasting picture in terms of preferred supply partners.

In the longer run, China is expected to reduce corn imports from the US, while showing added preference for Brazil.

"China's investments in Brazil cover various areas, including roads, railways, ports and so on, which will facilitate an increase in China's imports of Brazilian agricultural products. Additionally, China and Brazil have signed large currency swap agreements, which also strongly support agricultural trade between China and Brazil," Shanghai JC Intelligence told Commodity Insights.

In addition, Brazil's low-cost supplies are expected to further support Brazilian exports in coming years, while rising tensions with the US continue to reduce agricultural trade.

"It is consistent with the current situation for Chinese buyers to seek stable and long-term supplies, which would reduce agricultural imports from the US. We do not rule out the possibility of further deterioration in relations between the two, which could lead to a further decrease in imports from the US," JCI said.

Higher Brazilian prices pushing China away

In contrast to the long-term expectations, China is expected to show preference for the US in MY 2024-25 over Brazil, its largest supplier in MY 2023-24.

The significant reduction from Brazil to China is primarily due to lacking demand from China already seen, in addition to high export premiums and lacking competitiveness on the global market, Commodity Insights economist Mary Kate Porath said.

Furthermore, the biggest difference in the competitiveness of Brazilian supplies in 2023-24 compared with 2024-25 comes in terms of prices.

China tends to show preference for lower prices, going after the 'cheapest' provider, sources said.

In local crop year 2022-23, Brazil's corn output stood at 131.9 million mt, the largest on record, while its 2023-24 output is forecast 12.15% lower at 115.86 million mt, according to the country's food supply and statistics agency Conab.

Brazil's record output and abundant supplies reduced global prices in 2023-24, with Brazil emerging as the cheapest and most price competitive.

Although Brazil is again forecast to have a big output this year and large supplies from South America are still pushing prices down to some of the lowest levels in three years, Brazil is no longer the low-cost provider.

Brazilian FOB Santos is currently trading higher than its main competitors US and Argentina, thereby turning China toward the US in 2024-25.

Platts, part of S&P Global Commodity Insights, assessed corn FOB Santos for September loading at $195.95/mt Aug. 5, 49 cents/mt higher from the previous assessment.

Platts assessed US corn CIF New Orleans at $181.80/mt and Argentina corn FOB Up River at $186.52/mt on Aug. 5.

In this scenario, China is expected to buy more from the US and less from Brazil, at least until MY 2024-25, while showing preference for Brazil over US in the long run.