In 2021/2022, China purchased nearly all its 21 million tons of corn imports from the United States and Ukraine and 70 percent from the United States alone. However, since October 2022, China has increasingly diversified its corn import sourcing. An examination of China’s corn imports by volume notes a significant year-over-year increase in competition within China – led by a large increase in Brazil market share.
It is important to note that only two state-owned enterprises (COFCO and SinoGrain) handle most corn imports. China’s diversification efforts are linked to a proactive diversification of suppliers for food security. The key drivers of this shift are new market access for additional exporters and disruptions from traditional suppliers Ukraine and the United States.
The biggest shift in market share has come from Brazil. Brazil exports to China surged in late 2022 after an agreement in May 2022 to allow imports of corn from Brazil. The more than 2.2 million tons of Brazil corn China has imported in 2022/23 have shifted the structure of the market – particularly impacting U.S. market share due to competitive prices.
Other smaller exporters have also benefitted from China’s efforts to diversify trade. In February of 2022, China signed a phytosanitary protocol with Burma which cleared the way for cross-border trade. Subsequently, in 2022/2023, China has imported more than 300,000 tons of corn from Burma, a volume larger than the previous 3 years combined. China has also doubled imports from Russia, importing 200,000 tons in 2022/2023. And in May of 2023, China also imported a substantial volume of corn from South Africa for the first time, despite having removed most obstacles to trade through a protocol signed in 2014.
In previous years, China’s largest supplier had been the United States. However, in 2022/2023, U.S. corn has faced significant headwinds in logistics and tighter supplies which have made U.S. price quotes uncompetitive. Data from FAS Beijing indicates that prices for U.S. corn to be delivered in June-November averaged $330/ton, more than $30 higher than chief competitor, Brazil. This can be partially attributed to market orientation in both countries. Brazil is harvesting a record safrinha crop, 40 percent of which is anticipated to be exported. In contrast, the United States exports around 15 percent of production, with most supplies headed to the domestic market.
The other key supplier, Ukraine, has managed to maintain market share via the Black Sea Grain Initiative – exports in 2022/2023 (Oct-Jun) to China were 5.5 million tons. As Ukraine supplies are forecast to tighten on lower stocks and production, this amount is likely to fall in 2023/2024.
China’s move reflects a larger pattern among other large Asia buyers – such as South Korea, Japan, and Vietnam – to diversify sources of corn imports. The increasing frequency of trade disputes, the global COVID-19 pandemic, and the war in Ukraine highlighted the need for market participants to mitigate risks related to food security. By increasing the number of sources available from which to import, China faces less unpredictability in meeting the country’s massive demand for feed grains.