#5 | 5 Wild Years

After years of a limiting tariff rate quote system that was prohibitive to corn imports, China stepped into the world corn market in a big way in the 2020/21 marketing year and hasn't looked back since.

Ukraine has long been China's top corn supplier, reining supreme until the United States shipped China almost 20mmt of corn in calendar year 2021, nearly five times shipments in 2020 and more than 60 times its shipments in 2019.

There is a new top dog when it comes to Chinese imports, however, that rocketed into the #1 spot in a big way during 2023, after China approved Brazilian corn for import in the summer of 2022 and shipments began in November that same year.

4 | 4 Impressive Months

The 2023/24 marketing year is off to a record start as China imported 12.2mmt of corn during the first four months of the marketing year - nearly double the previous high set two years ago.

This record-fast import pace makes me wonder…

• Why? Especially as China produced its third record corn crop in a row in 2023
• With 12.2mmt of corn already imported in the current marketing year, is USDA's current 23mm full-year projection too low?
• Or, is this simply a product of Brazil's record corn crop last year?

#3 | 3 Records in 2023/24

As mentioned above, China produced its third record corn crop in a row in 2023. In fact, there are three major world producers that will see a record crop in the current marketing year: the United States (15.3bbu), followed by China (11.4bbu) and Argentina (2.2bbu).

The most striking thing about the chart above is the fact Brazil produces roughly one-third of what the United States does each year, but they have out-exported us for two years running. 

In 2022/23, Brazil overtook the U.S. as the top corn exporter in the world and they are currently estimated to edge us out marginally in 2023/24 with an estimated 2.125bbu in exports as compared with the current U.S. estimate at 2.100bbu.

#2 | 2 Concerning Trends

When we look at the soybean market - there are two trends that are of utmost concern:

1. China's stagnating growth in soybean imports. After year after year of double-digit percentage growth in soybean imports, Chinese demand is leveling off.

2. Brazil's rapid increase in both soybean area and production has been undeniable the past two decades. In fact, harvested area has grown on average more than 5% annually for the past seventeen years, overtaking the United States as both the largest producer and exporter of soybeans in the world.

These two together, coupled with an aging Chinese demographic and major economic headwinds make Brazil's current production concerns seem a bit less concerning in the long run.

#1 | 1 Big Correlation

With soybean oil's new-found demand in renewable diesel, the long-time less-desired byproduct of soybean crush now trades like an energy and can hold its own in a market that was previously dominated by meal.

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