China’s grain importers are heard beginning to position themselves for potential corn shipments from Brazil next year after the Chinese government released a list of eligible exporters earlier this week, a sign that trading could start in the near future.
In a list of more than 1,500 exporters published by China’s General Administration of Customs, there are 136 newly added entities with corn export eligibilities in Brazil, including the ABCDs, Cofco, Amaggi and other major players in the market.
This list sparked enthusiasm in China’s domestic market this week and reinforced the expectation that buyers could start contracting 2022/23 new crop corn from Brazil soon.
China approved imports of Brazilian corn back in May this year after the Chinese government signed a protocol on phytosanitary requirements for Brazilian corn with its Brazilian counterpart.
However, no clear signal was given until this week.
Many traders expect Brazilian corn to account for a large share of Chinese imports in the new marketing year of 2022/23, which is estimated to total 18 million tons.
Some have begun price checking for shipments in the second quarter of 2023 when new crop Brazilian corn is being harvested.
As low water draft in the US Mississippi River has pushed US corn export prices higher since early October this year and the war in Ukraine continues, prices for Brazilian corn could become more competitive.
According to brokers, spot shipment of Brazilian corn cargo from Santos port in Brazil is offered at 78 c/bu over November CBOT corn futures, which equates to $300/ton. While offers for the same shipment from US Gulf were heard at $305-310/ton.
Although new crop Ukrainian corn has been harvested and is ready for export, Chinese buyers are wary of high risk-premium in the region due to the ongoing war. As long as the war drags on, buyers will remain cautious towards the Black Sea market.
In 2021 calendar year, China imported more than 28 million tons of corn, and 70% of which was US corn. Ukrainian corn accounted for a third of the volume, but its share has tanked this year.
As Brazil recently elected a left-wing president Lula, traders expect his administration to promote more trade cooperation with China, including corn and other agricultural products.