Source: vietnamplus.vn
Farmers harvest rice in Hunan province, China. Image: VNA
Warehouses across China are filling up with grain as the country’s weakening economy puts pressure on global markets.
According to data from the US Department of Agriculture, for the season that began in September, the US sold only 13,400 tons of corn to China, much lower than more than 564,000 tons a year ago.
Meanwhile, French barley exports from the port of Rouen – including barley used to make beer – are down nearly 50% this season from a year ago. Australian wheat farmers may be worried as they prepare to begin harvesting the new crop in the coming weeks.
This situation is unlikely to change anytime soon, and the combination of an aging population and a weakening economy portends a dim outlook. Traders and farmers need to start adapting to a very different demand outlook. Even if food security concerns will help fuel strong imports in coming years, the rapid growth of the past 20 years may have come to an end.
“People are becoming more and more pessimistic about the economy and demand,” said Ms. Ivy Li, a commodities market analyst at StoneX in Shanghai. According to her, importing companies will be very cautious, only buying enough to meet demand.
The weakness of China’s economy and difficulties in the country’s real estate sector have dented consumer confidence. This causes households to cut back on meat consumption and limit restaurant visits, thereby reducing the amount of food needed to raise livestock or for food processing.
The Chinese government has taken many measures to try to support and protect farmers, asking traders to limit purchases of goods from abroad such as corn, barley and sorghum. This is an effort to reduce oversupply caused by too much import at the beginning of the year, when traders took advantage of buying cheap goods from abroad.
However, one key commodity that China will continue to rely heavily on imports is soybeans, with Brazil and the US being major exporters. China’s soybean output cannot meet the country’s demand, even as demand has decreased.
Brazil recorded record high soybean exports to China earlier this year thanks to cheaper prices. But the US has so far sold less than 5 million tonnes for delivery in the 2024-25 season – the lowest in 16 years excluding the 2018-19 trade conflict, and down 25% from a year ago.
Mr. Paulo Sousa, Chairman of Cargill Inc. in Brazil, said: “China’s demand is no longer as strong as before.”
The outlook for the Chinese economy remains bleak, with deflation showing signs of worsening and the country’s growth target for this year looking increasingly out of reach. China’s agricultural industry is starting to calculate imports for the 2024-25 season.
According to traders based in China, China’s corn imports this season could more than halve to 9-11 million tons, while wheat imports could fall from 13 million tons in the 2023 season. -24 down to about 7-9 million tons.
While profits for foreign farmers and traders may fall, the positive for global consumers is that cheaper grain could ease pressure on food inflation, which has skyrocketed due to the conflict in Ukraine.
Another unknown entering 2025 is the outcome of the US presidential election in November. This result could reverse trade flows if the winner takes a “tough” stance in trade relations. trade with China.
The final question mark is the weather – a factor that could affect China’s plan to reduce imports. Last year, China was forced to use a large portion of wheat for animal feed due to the impact of heavy rains, thus increasing imports.
