Chinese Imports of Feedstuffs Soar

China's imports of barley, sorghum, distiller's dried grains (DDGS), and cassava soared in 2013/14 (Oct-Sep) as feed millers sought alternative ingredients. China's domestic corn prices have been elevated by producer support programs, a tariff-rate quota for corn, and uncertainties caused by its heightened enforcement of an unapproved biotech trait for corn (and DDGS).

Traditionally, barley and sorghum are the main ingredients for beer, vinegar, and distilled spirits production. Now, however, imported barley and sorghum are being incorporated into rations for the rapidly developing industrial animal feed sector. Imports of barley and sorghum are forecast to continue at elevated levels in 2014/15, making the country the world's largest sorghum importer and the second-largest barley importer.

China accounted for over 80 percent of U.S. sorghum exports in 2013/14 and accounts for nearly all of U.S. export commitments (outstanding sales and shipments) to date in 2014/15, boosting U.S. sorghum export unit values above corn. However, a recent government agreement between China and Argentina to facilitate sorghum exports could bring competition and pressure prices lower. For the next few months, the United States will remain China's dominant supplier as new-crop Australian and Argentine supplies will not be available until March.



Global production for 2014/15 is down slightly, but still a record, as smaller crops in Australia, Egypt, and Kazakhstan are only partially offset by larger crops in the EU (mostly in Poland, Germany, Romania and Spain). Global trade is down on import cuts for China, Egypt, Pakistan, Russia, and South Korea. Brazil, Kazakhstan, and Mexico are boosted but do not compensate for the overall decline. U.S. exports and imports are unchanged. The season-average farm price is unchanged.

Wheat exporter ending stocks in 2014/15 are forecast up year-to-year on record global production, putting pressure on prices. The EU is the largest driver of rising stocks based on a record crop, quality concerns, and intensified competition, particularly from Russia. Despite record exports, Russian stocks are projected up on a bumper crop. Ukraine's stocks are expected to rise significantly as its major market for feed-quality wheat, the EU, has an abundant supply of lower-priced feed grains. Ukraine is also facing competition from lower-priced corn in other markets. U.S. stocks are forecast higher because of competition from other exporters and larger supplies in South America. By contrast, Canada's stocks are projected to decline based on tighter supplies, while Australia and Kazakhstan are nearly unchanged.


Prices for most wheat classes rose in October. Soft White Winter (SWW) spiked $21 to $276/ton as supplies tighten. Soft Red Winter (SRW) climbed $14 to $254/ton and Hard Red Winter (HRW) rose $3 to $285/ton. Hard Red Spring (HRS) dropped just $2 to $367/ton, but remains elevated.


Selected Exporter

• Australia is down 1.0 million tons to 18.0 million based on lower production.

Selected Importers

• Brazil is raised 500,000 tons to 7.0 million because of crop quality concerns in some regions.

• China is reduced 300,000 tons to 1.7 million due to the slow pace and expectations that the tariff-rate quota for the private sector will not be expanded.

• Egypt is slashed 800,000 tons to 9.5 million because changes to its bread subsidy program are expected to cut consumption and reduce waste considerably.

• South Korea is lowered 400,000 tons to 3.8 million because of reduced purchases of feed-quality wheat.

• Mexico is raised 300,000 tons to 4.6 million on a smaller crop and the strong early-season pace of shipments.

• Pakistan is down 300,000 tons to 700,000 because the Government implemented a 20 percent import duty to stem the influx of lower-priced imports.

• Russia is cut 300,000 tons to 200,000 due to lower supplies in Kazakhstan. Russia imported significant quantities of wheat from Kazakhstan over the previous 3 years



Global production for 2014/15 is slightly lower than last month as reductions in Egypt, Australia, and Afghanistan more than offset the increase in South Korea. Global trade is higher primarily driven by Thailand. Global stocks are reduced on stronger consumption in India and Vietnam. U.S. production is raised marginally, and trade is unchanged.

Since their peak in 2012/13, stocks in both India and Thailand have declined. Stocks in India are down as the government has released 5 million tons to control rising food prices. Stocks in Thailand are drawn down as the current government actively pursues sales opportunities to reduce stocks, bought under the now-discontinued paddy pledging scheme. The sizable decline in the two countries' stocks is forecast to drive down 2014/15 global stocks to the lowest in 5 years.


• China's 2014 imports are boosted 300,000 tons to 3.8 million on strong purchases mainly from Thailand and Burma. Imports for 2015 are up 300,000 tons to a record 4.0 million.

• Egypt's 2014 exports are cut 200,000 tons to 600,000, while 2015 exports are cut 375,000 tons to 500,000 reflecting a smaller crop in both years.

• Nepal's 2014 imports are up 100,000 tons to 350,000 on larger volumes from India.

• Philippines' 2014 imports are up 200,000 tons to 1.7 million reflecting large purchases from Vietnam and Thailand. Imports for 2015 are raised 100,000 tons to 1.7 million.

• Senegal's 2014 imports are raised 100,000 tons to 1.2 million on large shipments from Thailand. Imports for 2015 are also raised 100,000 tons to 1.2 million.

• South Korea's 2014 imports are cut 115,000 tons to 330,000 on trade trends to date.

• Thailand's 2014 exports are boosted 800,000 tons to 10.3 million on continued strong sales by the government. Exports for 2015 are also raised 800,000 tons to a record 10.8 million.



World corn production in 2014/15 remains a record and is nearly unchanged as smaller production in the United States and China more than offsets larger crop forecasts for the European Union, Ukraine, and Mexico. Global trade is down slightly as larger domestic feed grain supplies in the EU displace more corn imports. In addition, Chinese demand for feedstuffs is being met from barley and sorghum, reducing prospects for corn (and DDGS) imports. The U.S. season-average farm price is projected higher this month.


Since the release of the October WASDE report, U.S. corn export quotes have mostly climbed, continuing a trend that began 6 weeks ago. By early November, prices had risen $14/ton to $191/ton. U.S. export prices are underpinned by a late harvest, high barge rates and other logistical problems, and strength in the soy complex. However, price growth has been constrained by expectations for a larger U.S. crop and relatively slow export sales and shipments (exacerbated by a stronger U.S. dollar). The premium of U.S. quotes over South American has remained largely unchanged. Argentine and Brazilian quotes are now $14/ton and $6/ton below U.S., respectively. Black Sea quotes are $14/ton below U.S. and are up slightly over the last month as EU demand remains sluggish.


Selected Exporters

• Argentine corn is cut 1.0 million tons to 12.5 million and Brazilian is down 500,000 tons to 22.0 million on lower expected global trade and greater competition from Ukraine. (Ukrainian corn is boosted 500,000 tons to 16.5 million.)

• Canadian and EU barley are up 200,000 tons each to 1.2 million and 6.7 million, respectively, on strong demand from China.

• U.S. sorghum is raised 300,000 tons to 5.6 million on continued purchases from China.

Selected Importers

• Chinese corn is cut 500,000 tons to 2.5 million as policies favor imports of other feedstuffs.

• EU corn is 1.0 million tons lower to 6.0 million on plentiful supplies of feed grains.

• Iranian corn is boosted 200,000 tons to 5.5 million on reports of continued purchases.

• Chinese barley is raised by 500,000 tons to 4.5 million on continued strong demand. (2013/14 is up 400,000 tons to 4.9 million.)

• Chinese sorghum is boosted 300,000 tons to 4.6 million because of continued purchases from the United States.

• Mexican sorghum is slashed 200,000 tons to 100,000 on a larger crop.


Selected Exporters - based on trade data

• U.S. corn is up 200,000 tons to 50.7 million.

• Argentine corn is boosted 300,000 tons to 12.8 million.

• Paraguayan corn is raised 400,000 tons to 2.7 million.

• Ukrainian barley is up 200,000 tons to 3.7 million.

Selected Importers - based on trade data

• Indonesian corn is boosted 200,000 tons to 3.5 million.

• Mexican corn is raised 250,000 tons to 11.0 million.

• Turkish barley is cut 250,000 tons to 750,000