China buys corn from Brazil to fill the gap left by Ukraine

In an extremely rare move, China’s state-owned grain operators have begun purchasing corn from Brazil as the country seeks to protect itself from disruptions in shipments from its main suppliers in the United States and Ukraine.

According to operators, China ordered 250,000 to 400,000 tonnes of corn from Brazil for September.

The purchase came ahead of an agreement signed on Monday that guarantees Brazil’s access to the Chinese market, said the traders not authorized to speak publicly.

Brazil is the second-largest exporter of corn in the world, but China rarely purchased from the country in the last nine years due to phytosanitary concerns. At a meeting in Brasilia, the two nations finally agreed on sanitary guidelines after years of discussion, paving the way for increased purchases.

See below which were the main destinations of corn exports from Brazil in 2021 and 2022 from January to March. DataLiner provided the data below.

Top corn export destinations | 2021 | Jan – Mar 2022 | WTMT

Source: DataLiner (click here to request a demo)

China already buys most Brazilian soybeans exported abroad, another food ingredient used as animal feed for its vast swineherd. But its biggest corn suppliers are usually in the USA, where this year’s crop is threatened by drought. Then, Ukraine was cut off from the world market by the invasion of Russia.

China’s recent deal with Brazil could threaten the United States’ 70% participation in the Chinese corn trade.

“We have been working on this agreement for over three years and, of course, given the situation in Ukraine, they are committed to solving their need for corn,” said Glauber Silveira, executive director of the Brazilian Association of Corn Producers in Brazil.

“Now that the protocol is signed, the second logical step is to clear the different varieties of corn to avoid problems with customs.”

Chicago corn futures are down 2.8% since Monday amid concerns that the demand for US-grown corn could decline due to the deal.

Despite growing the majority of its own corn, China remains the world’s largest importer, spending nearly $8 billion on last year’s crop. Cofco and China Grain Reserves Group, or Sinograin, typically manage China’s largest agricultural purchases.

“We’re not going to get too optimistic about it either,” said Silveira. “Yes, it’s another destination, but we don’t want to rely too much on this buyer as it may buy from Ukraine again in the future.”

Source: Money Times

To read the full original article, please go to:

https://www.moneytimes.com.br/china-compra-milho-do-brasil-em-protecao-a-lacuna-da-ucrania/

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