China ready to import Brazilian corn in challenge to US supplies

 

China could begin importing corn from Brazil as early as December, part of a campaign by the world’s top buyer to reduce reliance on the US and replace supplies from Ukraine cut off by Russian aggression.

Some 45 facilities owned by companies, including Brazil, have been pre-approved for export to China, a list seen by Bloomberg shows. The final total will be higher due to the large number of requests, said a person familiar with the matter, who asked not to be identified as talks are on. The final list is likely to be sent to China in November.

China is taking steps to accelerate Brazilian corn imports, to diversify supplies at a time when the war in Ukraine has disrupted trade and tensions with the US are high. A rally of more than 20% in Chicago corn futures in less than three months, compounded by a rising US dollar, has heightened the urgency to find an alternative cargo. China is also curbing corn starch exports, a sign of the country’s woes about supplies.

Brazil could start exporting corn to China by end-2022

While Brazil is the second largest corn exporter, China has almost never bought from the agricultural powerhouse in the past nine years due to phytosanitary concerns. At a meeting in Brasilia this year, the two countries finally agreed on hygiene guidelines after years of talks, paving the way for purchases. The move threatens the US portion of the Chinese purchases.

Bunge leads the list visited by Bloomberg with 20 sites approved by Brazil to export corn to China. Once Beijing approves the listing, those companies will negotiate directly with buyers in the Asian country.

China already buys most of Brazil’s soybeans, another feed ingredient for its huge hog herd. The Asian nation has a history of moving away from US agricultural supplies at times of escalating tensions, such as during a trade war in 2018-19, and has a broader goal of reducing dependence on a single supplier.

 

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