China's Government Corn Sales Resume
- The government has resumed state corn sales even though farmers’ sales should be at a seasonal peak.
- Recent state sales have been less than the 4 million tonnes per week sold between May and September.
- 1.3 million tonnes were sold to processors and feed mills over the previous two weeks.
- This week followed with an offer to sell almost 1 million tonnes to designated buyers.
- Overseas purchases have also surged, exceeding the annual import quota for the first time ever.
- Dalian May corn futures closed at 2,641 yuan on Tuesday, compared with a record of 2,682 yuan on Dec. 1, up 38% this year.
FBN’sTake OnWhat It Means:中国正努力遏制玉米价格上涨,和sales of government stocks at this time may be a sign that domestic production was not up to forecast. It is likely that imports will remain strong next month when users receive fresh import quotas for the new year. We expect the US will benefit as our prices remain the most competitive in the world market, which will continue to support prices.
China Soy Imports May Increase
- State-owned Jiusan Group projects soybean imports will be above 100 million tonnes in 2020/21.
- Imports from the US could more than double to 36 million tonnes amid expectations of lower output from South America.
- Soybean imports from Brazil may decrease to 57 million tonnes from 69 million last year.
- The group forecast China soybean meal demand to increase by nearly 10% in 2020/21 after rising 5.8% last year.
- China’s soy crushers processed 88 million tonnes of soybeans in 2019/20 at an average capacity utilization rate of 69%.
- Crushing capacity is set to expand by 31,000 tonnes a day in the coming year.
FBN’sTake OnWhat It Means:The faster than expected recovery of China’s hog production has helped fuel the increased demand for soymeal. The rebound from the coronavirus slowdown and rising living standards in general are expected to underpin future demand growth. We expect US stocks will remain tight into the new year and continue to support higher prices.
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