Inna Stepanenko
Chief Analyst
ASAP Agri

The corn season 2024/25 has started in Ukraine. The country is waiting for Chinese demand, but there are no signs of revival. In the 2023/24 MY (October-September), China already reduced its imports of Ukrainian corn to 4.6 MMT vs 5.5 MMT in the previous season. So far, a considerable number of factors may lead to poor demand for any origin corn from China in 2024/25 MY. Overall imports of corn to the Asian country may shrink to a five-year low in 2024/25 MY. The USDA estimates it at 19 MMT, the local USDA office in China at 20 MMT, while the latest forecast from China’s AgMin sees imports at only 13 MMT. Some analysts do not rule out the imports to be as low as 10 MMT. Customs data for 2023/24 MY reported Chinese corn imports at 23.5 MMT.

ASAP Agri is digging for the prospects of Chinese corn import revival with the help of Daria Marchenko, Broker at Atria Brokers in this article. To ensure the most up-to-date information, we actively collaborate with advisors, who bring deep expertise and years of experience in the Black Sea region. Through their opinions and in-depth analysis, we strive to deliver transparent data on market dynamics, helping our readers stay informed on the latest trends. As well, the top important question of competitiveness of rival corn origins on the Chinese market will be negotiated at ASAP Agri’s corn panel discussion within Global Grain Geneva 2024, on 12-14 November.

CHINA’S AUTHORITIES TOOK STEPS TO REDUCE CORN IMPORTS

The main concern is the Chinese government's interference in the trading process. In April 2024, media reports indicated that Chinese officials asked buyers to limit foreign corn purchases intobonded areas. There was no official confirmation, but the news was followed by some cancellations of already booked cargoes, including those from Ukraine, suggesting that unofficial restrictions on corn imports are very likely. The key reason for these actions was the desire of China’s authorities to support local farmers ahead of the spring planting campaign and to reduce the excess domestic supply under conditions of insufficient demand from the local livestock industry.

In August 2024, there were reports that the Chinese government asked traders to limit imports of barley and sorghum, and again to reduce corn purchases, as internal stocks remained high and demand from local consumers stayed insufficient due to attractive prices in the global market.

2023/24 MY: HUGE CORN IMPORTS, BUT DECLINING CHINESE DEMAND

Monthly import statistics show a sizable decrease in corn supplies to China. In September, only 310 KMT of corn was delivered to the country, marking the lowest level since March 2020. This followed a 64% year-on-year drop in August, with imports falling to less than 430 KMT.

It is also important to note that there is an import quota for corn in China set at 7.2 MMT for 2024, and in September, the same quota was established for 2025, with 60% of the volume to be covered by state-owned companies.

However, in the full 2023/24 MY (October-September), imports surged to the second highest on record at 23.5 MMT, up from 18.7 MMT in the preceding season, marking the highest level since the 2020/21 MY, when 29.5 MMT of corn was delivered to China.

The increase in imports during the 2023/24 MY was driven by a strong supply of Brazilian corn to China, mainly in the first half of the season. As a reminder, China and Brazil signed an agreement to allow imports of Brazilian corn to China in May 2022, with phytosanitary standards agreed by November 2022. The first noticeable shipments of Brazilian corn to China were observed in January 2023. After the fresh Brazilian corn crop came to market, we saw a surge in deliveries to China from September to March of 2023/24 MY.

Generally, after China opened its doors to Brazilian corn, the South American country became the key supplier of corn to China. This puts significant pressure on US corn sellers and adds to the struggles of Ukrainian exporters, who are dealing with trade during wartime.

After massive purchases from Brazil, combined with insufficient domestic demand and government actions to ease foreign purchases, the Chinese appetite for import fell drastically in the second half of the 2023/24 MY.

CHINA-BRAZIL TIES SQUEEZING OTHER CORN ORIGINS FROM THE CHINESE MARKET

The easing of Chinese demand for corn also coincided with a reduction in shipments from Brazil. Typically, exports of Brazilian corn reach their peak in August. However, this year, shipments were 35% below year-on-year levels in August, according to official data. In September, they decreased by 27% year-on-year.

Despite tighter flows of corn from the key supplier, China is not demonstrating brisk demand for alternative sources, which mainly hurts US corn exporters. From April to September 2023/24 – months of poor supply from Brazil – imports of corn from the US totaled 1.2 MMT, down from 3.4 MMT over the same period in the preceding season, according to official Chinese data.

For Ukraine, the situation was a bit better. After the evaporation of Brazilian supply, China imported nearly 3 MMT of Ukrainian corn in the second half of the 2023/24 MY. This was below the 3.25 MMT imported a year ago, and current demand remains poor.

HIGH STOCKS AND LOW INNER PRICES ADDING TO POOR DEMAND 

Daria Marchenko
Broker 
Atria Brokers

“For now, in the main months of usual Chinese import of Ukrainian corn, the market is keeping silence and no vessels are being traded over there by main importers such as COFCO, ITG, CND. The reason lies in unofficial state ban, which most likely will renew only to the end of the year (Chinese one, of course, which falls on 29 January 2025),” Daria Marchenko, Broker at Atria Brokers, commented on the issue.

“After the conversation with my Chinese colleagues, I can emphasize that Chinese stocks are full of corn now, and domestic prices are really low – at about 2200 CNY/MT in September-October(in equivalent about 300 USD/MT, which makes no space for margin). Thus, any origin, not only Ukrainian, are out of demand from Chinese buyers. After the New Year, new law is going to be issued and consuming stocks internally will push internal prices up, where we can catch a margin. The only silent import which is going for corn/barley now is being processed by deep processing factories, built in bonded area. The quota volume has already been limited, but factory needs to work. The same situation refers to barley, the only low demand which is seen from Chinese side is for Australian barley at 245 USD/MT CIF, what Ukrainian origin cannot afford for now. Moreover, Ukrainian barley was facing difficulties with quality – TCK risk (Tilletiacontroversa Kuhn fungal disease), which prevent some big traders like Chinese Cofco from buying Ukrainian origin, and most barley was imported from Australia, Argentina, Canada, France, even if prices were higher than Ukrainian ones. And again, there are a lot of barley stocks in Chinese ports. 

To summarize, we can state that Chinese demand is still being low and they are covered by own stocks. So, all traders crossing fingers are waiting for New Year for cancelation of unofficial state ban and importing other origins (mostly Ukrainian) can finally take place,” said Daria Marchenko.

RECORD CHINA’S CORN CROP NOT LIKELY TO IMPROVE DEMAND

One more factor that will not contribute to better demand from Chinese buyers is the expected growth of domestic corn production in the country to a record 292 MMT, according to the USDA forecast, or even to 297 MMT, per the official estimate. China harvested 289 MMT of corn in the 2023/24 MY. A larger harvest also means that the government’s aim to reduce domestic stocks will be complicated.

Some local analysts suggest that the corn crop may fall short of the record forecast, as it has been affected by adverse weather conditions during the summer and autumn, including excessively high temperatures and flooding in some regions.

With the Chinese corn harvest currently underway and scheduled to be completed in November, the market will wait to see the final figure. However, even in the event of smaller production, supply will remain heavy amid ample stocks and sluggish demand.

The prospects for a renewal of Chinese demand for corn are quite gloomy. Low global prices, combined with potential pressure from a huge US crop, may stimulate demand, but the question is how sufficient the domestic stocks are and to what extent the Chinese government may interfere in the trade process. The recent Chinese stimulus to its economy is also a factor to watch, particularly in terms of whether it will boost the domestic livestock sector or not.

Olivier Bouillet
Head of Analytics & Insights
ASAP Agri

As for Ukrainian corn in particular, if there is a renewal of Chinese demand, it may benefit from a decline in exports of Brazilian corn from the 2023/24 harvest and only moderate restoration of shipments expected in 2024/25, as higher domestic consumption in the South American countrywill add to smaller exports. In turn, the prospects for the US to noticeably improve its position in the Chinese market are also questionable, as China has shown virtually no interest in buying US corn from the 2024/25 crop so far. Additionally, the upcoming presidential elections in the US are another factor to watch. So far, this has raised concerns among soybean traders, as everyone remembers the US-China trade war under Trump's presidency. However, in the atmosphere of traditional diplomatic tension between the two global giants, the factor of elections may cause some nervousness. 

However, currently Ukrainian corn is too expensive. According to Olivier Bouillet, Head of Analytics & Insights at ASAP Agri, since 01 September 2024 and as of 22 October, Ukrainian prices have strengthened by 25 USD from 175 to 200 USD/MT CPT, when December delivery for CBOT corn only recorded 8 c/bu or 2 USD/MT. As a result of recent evolution, Ukrainian origin is now displayed as one of the most expensive around the world just behind the French origin. Compared to the US, Argentina or Brazil, the Ukrainian origin is more expensive by 12 to 15 USD. At some point, Ukraine will face issues link with lack of competitiveness. Therefore, to conquer market share, Ukrainian corn should pursue its actual consolidation.  

Opportunistic behaviour of China in terms of corn suppliers’ choice will be discussed at ASAP Agri’s corn panel discussion within Global Grain Geneva 2024, on 12-14 November. Christina Serebriakova, CEO of ASAP Agri, will moderate the ‘Hottest Corn Panel of the Year’, scheduled for 13 November. Please, pass your questions to the Miller Magazine editor, so ASAP Agri will answer all of them.