Doubts about whether China's slow growth in corn imports can achieve its annual import target

The import speed of corn in China for the 2024/25 fiscal year (starting from October) has reached its lowest point in seven years, raising doubts about whether China's corn import target for this year can be achieved.

Customs data shows that only 180000 tons of corn were imported in January and February this year, with a cumulative import volume of 1.07 million tons in the first five months of the year (October to February), marking the weakest start to the 2017/18 fiscal year.

The US Department of Agriculture predicts that China will import 8 million tons of corn in 2024/25, lower than the previous forecast of 10 million tons; The Chinese Ministry of Agriculture predicts this month that China will import 9 million tons, lower than the previous estimate of 13 million tons and less than half of the 23.4 million tons from last year. Considering the slow pace of China's imports so far this year, industry insiders question the feasibility of this goal.

As a reference, 1.03 million tons were imported in the first five months of 2017/18, but only 3.5 million tons were imported throughout the year.

Reason and background

The slowdown in imports is due to multiple pressures. In 2024, the government will restrict overseas grain purchases to support domestic prices, coupled with the imposition of a 15% tariff on US corn in March (in retaliation for Trump's comprehensive 25% tariff), which will increase import costs. The economic downturn has dragged down the consumption of agricultural products (000061), and the shrinking demand for animal husbandry has caused corn futures to fall to a three-year low in January (about 2300 yuan/ton), with the intervention of the National Reserve to support the market. The steady increase in domestic production (289 million tons, up 1% in 2024) and sufficient inventory (140 million tons at the end of the year) further weakened import demand.

Data Analysis and Interpretation

In January and February, imports amounted to 180000 tons (an average of 90000 tons per month), a sharp drop of 97.1% compared to the same period in 2023/24 (an average of about 1.95 million tons per month). The 1.07 million tons in the first five months only accounted for 11.9% of the predicted 9 million tons. If this speed is maintained, the annual import may only be 3 million tons, far lower than expected. After tariffs, the CIF price of US corn is about $295/ton (base price of $250+15%), which is higher than Brazil's (about $270/ton), weakening competitiveness. The weakening of demand in the livestock industry (pork imports only increased by 10% to 380000 tons) and the reduction of corn for ethanol use (5% decrease in 2024) have exacerbated import fatigue.

Prediction and Prospect

The forecast of 9 million tons assumes a surge in imports in the second half of the year (with an average of about 1 million tons per month), but current trends and policy restrictions do not support this rebound. The United States accounts for 70% of China's corn imports (2023/24), and tariffs may shift to Brazil (exporting 55 million tons in 2024), but logistics bottlenecks (Brazilian corn exports reduced to 2 million tons in January) limit supply. Domestic inventory can support until mid-2025, with low short-term import pressure. In the medium term, if the trade war escalates or weather impacts South American production, imports may rebound, but the target of 9 million tons remains optimistic or may be adjusted to 5-6 million tons.

conclusion

China's corn imports are growing slowly, with a starting point of 1.07 million tons, making it difficult to meet the forecast of 9 million tons. In the short term, they are dragged down by policies and domestic demand, while in the long term, there are trade and weather variables. Actual imports may be close to 3.5 million tons in 2017/18, please pay attention to the May supply and demand report and Brazil's export dynamics.