China to Speed Brazil Corn Imports Amid US Tensions
Aug, 15, 2022 Posted by Gabriel MalheirosWeek 2022233
China is moving to speed up imports of corn from Brazil, bringing in a new grain supplier at a time when the war in Ukraine has disrupted trade and tensions with the United States are soaring.
Beijing will temporarily waive a key clause that paves the way for Brazil, the largest exporter behind the United States, to ship corn to China in the coming months, according to people familiar with the matter. This follows an agreement reached in May that guarantees Brazil access to the world’s largest grain market in the long term.
See below the track record of Brazilian corn exports from January 2019 to June 2022. The chart below was done using data gathered by Datamar’s business intelligence team in the platform DataLiner.
Corn exports from Brazil | Jan 2019 – Jun 2022 | WTMT
Source: DataLiner (click here to request a demo)
The agreement, which took years to complete due to phytosanitary issues, requires the Brazilian government to provide advice to farmers on chemical application and crop management before planting to ensure that producers take measures to avoid disease.
China will waive that condition for the current season, the people said, some of whom asked not to be identified because they are not authorized to speak publicly. If the rule still applied, it would hamper shipments because it was imposed after planting began.
Corn producers and exporters were briefed on China’s decision by Brazil’s agriculture ministry during a meeting on Aug. 5, according to Sergio Mendes, head of the Associação Nacional dos Exportadores de Cereais, an association of grain shippers, and Glauber Silveira, executive director of the Brazilian Association of Corn Producers, a group of farmers.
China has sought to diversify its corn imports, of which about 70% came from the United States and 30% from Ukraine last year. The decision to increase purchases from Brazil comes as Ukrainian supplies have been cut off from the world market by the Russian invasion, and tensions between China and the United States are rising, fueled more recently by the visit of US House Speaker Nancy Pelosi to Taiwan earlier this month.
China already buys most of the soybeans from Brazil, another feed ingredient for its huge herd of pigs. The Asian nation has a history of walking away from U.S. agricultural supplies at a time of escalating tensions, such as in 2018-19 during a trade war, and has a broader goal of reducing reliance on a single supplier.
Smoothing the way
“It’s pretty clear that Beijing is looking to smooth the way for Brazilian maize to replace the maize it would typically buy from Ukraine,” said Even Pay, an analyst at consultancy Trivium China in Beijing.
“Beijing is concerned about its high degree of dependence on the United States for corn and other agricultural products,” Pay added. “Beijing is extremely unlikely to seek to cut US corn imports. Beijing also wants to keep some sort of floor under the relationship. »
Chinese grain traders are negotiating the first shipments of corn from Brazil, some people, who asked not to be named, said. Supplies will likely come from Brazil’s 2021-22 crop and are expected to arrive later this year, they said.
Despite the waiver, China has not lowered the bar on health requirements, as the country has made it clear that shipments with any disease listed as intolerable by local authorities will be refused, said Mendes, head of the known exporter group. under the name Anec. But this no longer requires measurements before sowing.
“Maize will have to be plague-free anyway,” Mendes said by phone. The first shipments should be made in the second half of the year, he added.
“Even though this crop fell far short of its potential due to dry weather, we have plenty of maize to export,” Silveira said by phone. Brazilian corn is about $17 a tonne cheaper than US prices, according to data from Commodity3.
Source: Bloomberg
To read the full original article, please go to: https://www.bloomberg.com/news/articles/2022-08-11/china-to-speed-brazil-corn-imports-amid-ukraine-war-us-tension#xj4y7vzkg
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