ĦĦĦĦChinese corn market end-users estimate stock levels in the country at around 70-80 million mt in 2019, according to one Asian trader, responding to reports that a Chinese agriculture ministry official had said he expected China to sell of the last of its aging corn stocks within 2019.
ĦĦĦĦThere is no official number released by the Chinese agriculture ministry on the current level of corn stockpiles, so market participants all work on estimates.
ĦĦĦĦUsual Chinese corn demand is estimated by market players at around 220 million mt/year, said the source, although in 2018 demand has increased to around 280 million mt, most of which came from starch producers.
ĦĦĦĦHowever, another source said that the increase in corn demand also came from feed millers in China, who had to cope with the fallout of the US-China trade war and China's inability to purchase soybeans from the US market. This resulted in China buying only non-US soybeans, mostly from Brazil, especially in the later part of 2018.
ĦĦĦĦThe protein percentage in China's feed formulation was reduced at the start of the trade war, allowing millers to mix less soybean meal into the feed blend, which resulted in higher corn being blended, said the source. In addition, the spread of swine flu in the pig population in China has also hit feed demand.
ĦĦĦĦHowever, Chinese buyers are buying less pork due to swine flu fears, so the Chinese government has made pork purchases for the official pork reserve, in order to keep Chinese pork prices from falling drastically.
ĦĦĦĦHowever, corn demand is expected to rise in China, the first source said, with market players estimating a shortage of around 10 million mt of corn in 2019.
ĦĦĦĦIn October 2018, China announced the official corn purchase import quota for 2019 at 5 million mt, which was higher than the 2017 quota announcement of 3 million mt.
ĦĦĦĦSome market players expect the 2019 quota to rise to 10 million mt, maybe with an additional quota announcement from the government to fulfill the gap in expected demand. |
