context: After hitting the second-highest volume on record in 2023, grain imports surged through H1 2024, driven by low global prices. Import volumes rose 9.3 percent y-o-y through May, reaching 84.18 million tonnes by the end of H1, up 4.7 percent y-o-y. However, these low prices saw the value drop 13.9 percent. Recent rumours suggest that import restrictions may be imposed to support domestic grain prices. This follows previous price support measures, like Agricultural Development Bank of China earmarking C¥110 bn for summer grain purchases in May to stabilise prices.
Beijing reportedly plans to tighten grain import restrictions to protect domestic farmers and stabilise local grain prices.
The government may cap total annual grain imports at or below 2023 levels. Any excess could be delayed until 2025, with controlled customs clearance to manage monthly import volumes, reports New Agriculture Observer. This would mean capping imports of the 'four major grains' (rice, wheat, corn and soybeans) at 3.7 million tonnes/month for the rest of the year.
Major grain importers were advised in the last week of August to halt the import of barley and sorghum to boost domestic prices and support farmers' incomes, reports Grain & Oil Daily. Barley imports have risen 67 percent, and sorghum has surged 95 percent y-o-y January–July 2024. Despite falling domestic prices, foreign barley and sorghum are mainly used for feed, thus squeezing out demand for corn and weakening domestic prices.
USDA data shows that no new-season corn has been sold to the PRC this year, compared to 270,000 tonnes last year, raising concerns about future adjustments to the PRC’s import targets and the pressure this would exert on global grain prices. This is despite imported US corn costing C¥1,930/tonne, including taxes, around C¥400/tonne cheaper than domestic corn [CP note: another sign of the broad push to 'de-Americanise' imports].
Domestic corn and wheat prices have shown signs of stabilising in response to the news of potential import restrictions. However, despite the expected tightening of import controls, the impact on the domestic market might be limited due to ample domestic supply, including increased corn production and sufficient wheat reserves, argues New Agriculture Observer.
The primary challenge is weak demand, particularly in the feed sector, rather than supply. Decreased pig farming activity has led to a decline in feed consumption, lowering the demand for corn. The drop in corn prices has increased its competitiveness, reducing the demand for wheat as a substitute. Even if grain imports are restricted, weak domestic demand will continue to exert downward pressure corn and wheat prices.