China Boosts U.S. Grain Imports for Animal-Feed InventoryJeff Wilson
China, the world’s biggest hog producer, bought 2.04 million metric tons of grain from U.S. exporters this week to bolster inventory of livestock feed amid a shortfall in domestic supplies and increasing meat demand.
U.S. exporters, the top corn shippers, today reported sales of 960,000 tons for delivery in the 12 months after Sept. 1, the U.S. Department of Agriculture said in a statement. The deal marked the eighth-biggest single-day transaction ever for the grain. Earlier this week, China bought 240,000 tons.
China’s corn consumption in the 12 months that begin Oct. 1 will exceed production for the fourth time in five years, the USDA said yesterday. Imports will more than double to a record 7 million tons next season from this year, the agency said. U.S. exporters reported sales of 840,000 tons of wheat to the Asian nation on July 8 for delivery before May 31. Rising incomes are boosting consumption of meat.
“Chinese prices of wheat and corn are substantially higher than world prices, increasing demand for imported grain supplies,” William Tierney, the chief economist at AgResource Co. in Chicago, said in a telephone interview. “These purchases are an indication that the Chinese government wants to build inventories.”
On July 5, corn futures for delivery after the harvest on the Dalian Commodity Exchange reached a record premium above the December contract on the Chicago Board of Trade, according to data compiled by Bloomberg.
The cost of imported corn delivered to ports in China is 4.3 percent cheaper than domestic cash prices, according to data from Shanghai JC Intelligence Co. The country will produce 710.6 million pigs this year, or 56 percent of the global total, USDA data show.
Today, corn futures in Chicago fell the most in a week, partly on signs of a rebound in U.S. output.
Corn is the largest U.S. crop, followed by soybeans, hay and wheat, USDA data show.
The biggest corn sale by U.S. exporters was 3.72 million tons to the Soviet Union on Jan. 9, 1991. Companies are required to make government reports on transactions of 100,000 tons in one day to a single destination.