China’s Grain Imports Bounce Back

03.11.2017

In 2015, Chinese seaborne grain imports exceeded 100mt for the first time, accounting for almost a quarter of global seaborne grain imports that year. Imports have been volatile since, with lower demand for imports of some types of grain in 2016 leading to a 9% decline in total Chinese grain imports last year. However, so far in 2017, growth has again been apparent as imports have firmly bounced back.

Roaring Appetite

Chinese seaborne grain imports have grown strongly over the last decade, and in 2015, imports increased 26% y-o-y to 110.3mt, accounting for around 80% of growth in global grain trade. The majority of Chinese grain imports are soybeans, with soybean imports rising 14% y-o-y to 81mt in 2015, driven by growing domestic demand for livestock feed and attractive import prices. However, more than half of growth in China’s grain imports in 2015 was accounted for by coarse grains (principally barley, sorghum and maize), imports of which almost doubled to 26mt. High domestic maize prices led to an 84% y-o-y increase in maize imports to 4mt, and encouraged substitution of domestic maize with other imported grains for livestock feed, with China’s imports of both barley and sorghum totalling 11mt in 2015, up 98% and 85% respectively.

Feeling Full

However, this increase in coarse grain imports was not sustainable, and Chinese coarse grain imports fell by 44% in 2016 to 15mt. This largely reflected the cancellation of China’s maize purchasing and storage policy in 2016, which led to a significant increase in domestic maize availability. This, combined with slower growth in demand for livestock feed, led to oversupply in the domestic maize market, with reported maize stockpiles of over 200mt and a decrease in maize prices from over 2,000 Yuan/t in early 2016 to 1,600 Yuan/t by the end of the year. Meanwhile, soybean imports continued to grow, albeit slowly, by around 2% to total 83mt. However, this was insufficient to offset the drop in coarse grain imports, and overall Chinese seaborne grain imports fell 9% in 2016 to 100.7mt.

On The Rebound

So far in 2017, China’s grain import demand has improved, with imports up by a robust 17% y-o-y in January-August. Soybean imports have driven most (c.80%) of the growth, rising 17% y-o-y to 63mt, supported by firm demand for soybean products (meal and oil), and larger harvests in the US and Brazil. Wheat imports have also risen by a third to 3mt. Coarse grain imports have increased by 9% y-o-y to 12mt, driven by the doubling of barley imports to 6mt, reflecting firm demand from the malting industry and greater availability of competitively priced Australian supply. However, high domestic maize supply has exerted further pressure on maize and sorghum imports.

So, Chinese grain imports have been volatile in recent years, largely owing to impacts on coarse grain imports from changes in domestic policies. This year, with the focus of import growth shifting back to soybeans, Chinese grain imports now seem on track to expand by 16%, and again account for over 50% of the projected 6% growth in global grain trade this year, and set another new annual record at the same time.


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