A popular 1970s TV sitcom in the UK saw one character occasionally run round shouting "don’t panic, don’t panic!" No-one was panicking, but seeing this character getting agitated they started to wonder if they should panic.

The reassurance by China’s ministry of agriculture this week that there’s no food shortage in China and that market supply is stable and orderly may have injected doubts where none had previously existed.

In July this year the price of pork (the preferred meat in China) was 85.7% higher than the same month in 2019; pork prices in China have more than doubled during January to July compared to the same period last year. Last year China saw its pig herd cut by around half to 200m head thanks to African Swine Fever (ASF).

China has spent much of this year re-stocking its pig herd and replenishing its frozen pork stocks - it imported a monthly record 430,000 tonnes in July and the January-July pork imports of 2.56m tonnes were more than double, year-on-year. The re-stocking of live hogs also helps explain that tremendous amount of soybeans China has bought - and will continue buying - this year.

But China is caught between a rock - an insatiable need for basic foodstuffs - and a hard place - the need to show it is tackling the threat of Covid-19 and avoid further trade freezes.

Contradictions at play

With 24m total cases and some 822,000 deaths worldwide attributed to Covid-19 - plus the global economic collapse brough on by government responses to the virus - China is highly conscious that it can ill-afford a "second wave" of contamination. That would risk further paralysis for its vital export markets.

World trade has sharply recovered from the low point of mid-May, when the Baltic Dry Index (BDI) was 64% down since the start of 2020 - the BDI is now more than 38% higher than it was at the start of the year - but the recovery is in the hands of how Covid-19 plays out.

All of which helps to explain the apparent contradiction: reassuring "don’t panic" messages from China’s agriculture ministry, while China has banned some food imports from some countries (shrimp, salmon, meat, among them), yet it has made massive purchases of corn and soybeans so far this year.

China imported 45m tonnes of soybeans in the first half of 2020, 18% more year-on-year - more than two-thirds of thes beans were from Brazil. China has booked around 10m tonnes of US soybeans for the 2020-21 season and around 5.7m tonnes of US corn - which if all is shipped would be a record.

Soybean alliance

China’s is the world’s biggest soybean buyer. It annually consumes around 110m tonnes a year, mostly as animal feed, but it produces less than 15% of that amount. The US/China trade deal signed in January is fraying at the edges and China would dearly love to dispense with its reliance on American farmers.

So it comes as no surprise that China’s commerce minister has just proposed to Russia a "soybean industry alliance". This might be seen as another "don’t panic" moment - Russia produces about 4m tonnes of soybeans a year, with exports around 800,000 tonnes, mostly to China.

China’s undeniable corn and soybean import needs were briefly stifled by Covid-19 but markets usually discover what’s really going on - the futures price of corn has risen by 13%, that of soybeans by 12%, since the end of April. American farmers need have no fear that the China market will dry up.