China Cutting Back on Imports of Feedstuffs

China's total imports of corn, barley, and sorghum are expected to drop from the record 2014/15 (Oct-Sep) level. Sorghum imports for 2015/16 are slashed 4.0 million tons this month, down over 30 percent year-over-year. As the United States is the primary supplier of sorghum to China, U.S. exports for 2015/16 are down 3.5 million tons this month. The Government of China's recent support price changes for the Northeast region are putting downward pressure on corn prices, encouraging higher domestic corn consumption. This action is resulting in less demand for alternative feeds such as sorghum, barley, distiller's dried grains (DDGS), and cassava. With U.S. sorghum sales to China dwindling, its export price premium over corn has fallen from nearly $100/ton in April to less than $20. The discount for sorghum relative to corn in the internal U.S. market sharply increases prospects for domestic use.

Chinese feed millers have been purchasing other feedstuffs over the last 3 years, displacing corn. Beginning with 2013/14 , China's corn feed and residual consumption is revised down 28.0 million tons (at the same time food, seed, and industrial (FSI) consumption has been raised 4.0 million). As a result, China's ending stocks jump almost 24 million tons. The year-to-year increase for 2015/16 corn feed usage is 10.0 million tons, representing a larger proportion of total feed grain disappearance.

OVERVIEW

World corn production in 2015/16 is up, with higher forecasts for the United States, Argentina, and Brazil more than offsetting smaller crops in Ukraine, South Africa, and India. Global trade is little changed overall. Exports are raised for Argentina and Brazil, but lowered for Ukraine, the United States, India, and South Africa. The U.S. season-average farm price is lowered.

Estimates of Brazil's corn feeding and stocks were revised for the years 2006/07 through 2011/12. Feed and residual use was raised and stocks were lowered, each by a total of 5.0 million tons over those years. China's corn feeding and stocks were revised from 2013/14 through 2015/16. Feed and residual use was lowered by a total of 28.0 million tons, reflecting expanded imports and consumption of alternative feedstuffs because of relatively high domestic corn prices. FSI consumption was raised 4.0 million tons, supported by government subsidies to corn processors. As a result, corn ending stocks were raised nearly 24 million tons.

PRICES

Since the release of the October WASDE report, U.S. corn quotes were little changed at $183/ton while Argentine, Brazilian, and Black Sea quotes were all up slightly. The premium for U.S. corn shrunk over the last month as the harvest entered its final phase and uncertainties over the crop size diminished. However, reluctant farmer selling has kept U.S. prices relatively high against competitors, despite burdensome supplies.

TRADE CHANGES IN 2015/16

Selected Exporters

  • U.S. corn is down 1.0 million tons to 46.0 million on the slow pace of sales to date and abundant South American supplies.
  • Argentine corn is raised 2.0 million tons to 17.0 million on larger crop prospects.
  • Brazilian corn is boosted 2.0 million tons to a new record 33.0 million on higher anticipated 2015/16 production. For the fifth consecutive month, Brazil's exports have been raised to a new record as the production estimate has grown.
  • Indian corn is down 500,000 tons to 1.5 million based on a smaller crop and high relative prices.
  • South African corn is lowered 200,000 tons to 800,000 with reduced planting expectations.
  • Ukrainian corn is reduced 2.0 million tons to 15.0 million on account of lower production.
  • Canadian barley is up 200,000 tons to 1.7 million based on improved competitiveness.
  • EU barley is raised 1.0 million tons to 8.0 million on a larger crop and the fast pace of export licenses.
  • Russian barley is down 1.0 million tons to 3.0 million on lower production. (Exports for 2014/15 are raised 300,000 tons to 5.8 million.)
  • U.S. sorghum is lowered 3.5 million tons to 7.5 million on reduced demand in China.

Selected Importers

  • Iranian corn is up 500,000 tons to 4.5 million on stronger prospects for feed demand, as suggested by higher 2014/15 imports. (Imports for 2014/15 are raised 200,000 tons to 6.2 million.)
  • Israeli corn is down 200,000 tons to 1.6 million on lower expected feed use in light of weaker imports in 2014/15. (Imports for 2014/15 are down 400,000 tons to 1.3 million.)
  • Saudi barley is boosted 500,000 tons to 7.5 million on higher-than-anticipated late-season shipments for 2014/15, which raise expectations for demand in 2015/16. (Imports for 2014/15 are boosted 500,000 tons to 8.0 million.)
  • Chinese sorghum is slashed 4.0 million tons to 7.0 million on slowing purchases, evidenced by the shrinking price premium for U.S. sorghum relative to U.S. corn.
  • Mexican sorghum is up 450,000 tons to 500,000 based on recent purchases, a smaller crop, and the lower cost of U.S. supplies.

TRADE CHANGES IN 2014/15

Selected Exporters- based on trade data

  • Mexican corn is raised 300,000 tons to 800,000.
  • Paraguayan corn is up 312,000 tons to 3.0 million.
  • Russian corn is boosted 300,000 tons to 3.2 million.
  • Australian barley is down 232,000 tons to 5.3 million.

Selected Importers - based on trade data

  • Egyptian corn is up 300,000 tons to 7.8 million.
  • Indonesian corn is lowered 300,000 tons to 3.2 million.
  • Mexican corn is hiked 269,000 tons to 11.3 million.
  • Chinese barley is up 859,000 tons to a record 9.9 million.
  • Iranian barley is lowered 200,000 tons to 1.8 million.
  • Libyan barley is raised 200,000 tons to a new record 900,000.