US increases share in Chinese corn import market

China is on track to become the world's largest corn importer during the current 2020/21 marketing year, with purchases likely to turn out more than three times higher year on year. But while Ukraine has continued to sell a large proportion of this volume, its exporters have faced strong competition from the US for market share.

China's corn imports are projected to jump to around 24mn t this season, the latest estimates from the US Department of Agriculture (USDA) show, from annual levels of just 5mn-7mn t in recent years. A key driver has been strong demand from the country's animal feed sector, which has recovered strongly this year from the African swine fever epidemic which significantly reduced hog inventory levels in 2018-19.

But despite the majority of China's corn imports having been supplied by Ukraine in previous years, Ukrainian exporters have faced strong competition from US counterparts this season, a trend that is expected to continue.

The US has shipped a total of 6.7mn t to China so far this marketing year, which began on 1 October 2020, compared with the 4.5mn t that Ukraine has exported.

But by contrast with the Chinese market, the US continues to dominate elsewhere and has no competitors for demand from the world's second-largest corn importer, with US supplies covering more than 95pc of Mexico's imports of 16mn-16.5mn t a year. The same is true for Colombia, which purchases 5.5mn-6mn t of corn annually, with the US supplying around 95pc of those volumes.

Americas supply dominant in Japan, South Korea, Vietnam

Along with Brazil, the US is also the major corn supplier to Japan, which purchases 15.5mn-16mn t of the product every season.

Ukraine supplied corn to the Japanese market in the past too, but quality issues prompted Japan to stop these purchases. Ukrainian exporters continue to seek ways to regain entry to this market.

South Korea, another big Asian corn importer, which buys 11.5mn-12.5mn t of product each year, prefers to diversify its imports, with US and Argentinian supplies accounting for around 24pc and 26pc of total 2020 import volumes, respectively, while the Ukrainian and Brazilian shares stand at about 16pc each. And that strong competition is likely to continue in the coming seasons.

Vietnam covers its large annual corn imports, standing at around 11mn t, with South American supplies, and Brazilian corn consolidated its position in the Vietnamese market last year, having completely squeezed out Argentinian supplies.

In Europe, the Netherlands — the largest European corn buyer — secures the majority of its import purchases from Ukraine, which is also the main source for Spanish imports, followed by Brazil. But high prices for Ukrainian corn in the 2020-21 marketing season could result in rising competition from US and Argentinian supplies on the European market in 2021.

Iran, which imports 6mn-7mn t a year, purchased almost all of its import volume from Brazil in 2020, as most countries are still avoiding trade with Iran following the sanctions that have been imposed on the country.

But some multinational companies appear willing to export to Iran via third countries, with Switzerland, which produces just 150,000 t of corn according to the USDA, having supplied around 23pc of Iran's total imports over the past three years.

By Alexey Tartakovsky