China’s corn imports in 2020-21 are “to outperform” the US Department of Agriculture’s forecast.

And potentially by a margin.

So says fertilizer group Mosaic, which portrays what only be described as a parallel universe in terms of China’s corn supply and demand compared with that suggested by the USDA.

The USDA’s forecast of China importing 7.0m tonnes of corn in 2020-21 stank when it was restated two weeks ago, as Agrimoney pointed out, and is ponging even worse today. (China had 9m tonnes of US corn alone on order for 2020-21 as of two weeks ago, according to USDA data.)

Mosaic is looking at Chinese import figures of a multiple of that.

The parallel universe

After all, the combined Chinese corn production deficit on a five-season basis may well prove hugely above the 52m tonnes suggested by the USDA.

According to Beijing-based analysis group Cofeed, the aggregate deficit from 2016-17 to 2020-21 will end up at 252m tonnes. (See table below.)

Whatever figure you use for the great unknown of China’s corn stocks – the USDA is using 201.1m tonnes as of the end of 2019-20 – a shortfall of the type that Cofeed is talking about is going to make a dent to supplies.

And require quite a bit of repair.

‘Import scenarios’

As to how much, Mosaic lays out “China corn import scenarios” of 17m tonnes, 22m tonnes and 25m tonnes.

Any of these figures would be, besides clear records for China, enough to rank the country among the world’s top importers.

The USDA currently foresees the EU buying in 25.0m tonnes in 2020-21 with Mexico in second place on 18.3m tonnes, and Japan third on 16.0m tonnes.

Import pace

The forecasts pose (at least) two questions.

One is whether the scenarios are realistic. Certainly, China is expanding its imports, which in August soared 340% year on year, to 1.02m tonnes, customs data on Wednesday reveal.

Still, for the first eight months of 2020 as a whole, the pace of increase shows at a more modest 50%, taking the total to 5.59m tonnes.

Price impact

The second is what extra Chinese demand might mean for Chicago prices.

Mosaic says that, assuming “the US supplies 55% of additional China corn imports”, buy-ins of 17m, 22m and 25m tonnes would mean US stocks at the close of 2020-21 of 2.3bn, 2.0bn and 1.6bn bushels (40.6m tonnes) respectively.

These are tighter than the 2.5bn bushels the USDA is currently proposing, and heading towards oppressive levels.

But they don’t look enough on their own to send prices stratospheric, to levels much above $6 per bushel, even taking account of extra demand to other exporting countries.

Which may be, of course, one reason why China is keen to get purchases in now before, say, dry weather in Argentina or Brazil really put a squeeze on supplies.