Big Corn & Bean Sales
- Soybean sales, for the week ended October 15, were 81.8 million bushels, remaining sharply above year ago sales.
- Total commitments for 2020/21 are up to 1,666 million bushels compared to 671 million bushels at this time last year.
- Sales included another 30.6 million bushels to China, bringing total purchases 915 million.
- Corn sales rebounded above market expectations last week to 72.1 million bushels.
- The increase in corn sales was led by China’s purchase of 17.1 million bushels, bringing their 2020/21 total to 413.3 million.
- Total commitments are record high for this point in the season at 1,116 million bushels compared to 427 million bushels last year.
- Wheat sales were disappointing, down 31 percent from the previous week at 13.5 million bushels.
- Upland cotton sales of 227,800 running bales were up noticeably from the previous week and 51% above the prior 4-week average.
FBN’s Take On What It Means: FBN expects the grain markets will continue to be supported by increased export sales activity.
China May Increase Corn Imports
- Reuters reported China’s government is expected to issue more import quotas and buy additional corn in the new crop marketing year.
- China currently has a 7.2 million tonne annual low-tariff quota (TRQ) system for corn imports.
- Imports outside the quota would incur tariffs of up to 65%.
- Importers have bought nearly 12 million tonnes of corn from the US and around 5 million tonnes from other countries.
- China’s state trading firm (COFCO), has used special low-tariff quotas of at least 5 million tonnes to purchase US corn for delivery through April.
- COFCO will import the corn at the lower tariff rate, but its profits will be capped at $4.49 per tonne with additional profit going to the government.
- China’s state planner, the National Development and Reform Commission, which sets import quotas has not confirmed reports.
FBN’s Take On What It Means:China in the past has not been a major importer of corn. However this year, China is already close to Japan as the world’s second-largest corn importer behind Mexico’s 18.3 million tonnes. Increased animal feed demand as the country rebuilds its pig herd and tightening supplies after auctioning off a portion of aging government stockpiles have driven up domestic prices and incentivized imports. China may also turn to the US more considering the need to fulfil commitments under the Phase 1 trade deal. This is a positive for feed grain prices in general and underscores the strong global feed demand situation.
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