The world’s largest corn importer, China is now also opening its doors to Brazil. The Brazilian and Chinese governments are defining a list of products that will be traded between the two countries.
Good for both. The Chinese achieve market diversification and reduce dependence on the United States. Brazil advances in the main world grain market.
In addition, it is a step towards adding value to exports to China, when the protocol of intentions to expand soybean meal exports is concluded.
Corn exports are already released, as well as peanuts, but the expansion of soybean meal is still under negotiation.
Another important product on the Chinese import list is sorghum. Brazil still has incipient production, but a large market like that of the Chinese could encourage Brazilian production.
During the trade war with the United States, one of China’s main grain suppliers, the Chinese had problems with domestic supplies, including sorghum.
The Chinese, the world’s largest importers of soybeans, have also been the main buyers of corn. In the 2020/21 harvest, China imported 29.5 million tons. In this one, it should import 23 million. In 2022/23, it will be 18 million tons. The commercial harvest runs from October to September.
Mexico falls to the second position, with a forecast of purchases of 17.7 million tons in the next harvest.
Brazil enters this scenario as an alternative market for China, which reduces dependence on the US and obtains one more supplier. Ukrainians, major corn exporters to China, are currently having trouble shipping their product due to the war.
The reasons for this Chinese opening to the Brazilian product may not only be due to the security of having one more supplier, but also due to lower domestic production and the drop in inventories. The Chinese numbers, however, are secrets.
The pressure of Chinese domestic demand for the cereal is less this year. The recomposition of pork production is at a weak pace, mainly because the sector’s margins are negative.
Brazilian animal protein producers did not like this opening of corn exports to the Chinese. Production costs could rise even more, according to one of them.
If confirmed the production level of the off-season, 86.3 million tons, Brazil will have a total production of 112.3 million tons at the end of the harvest, according to AgRural.
With this volume produced, the country should once again be the world’s second largest exporter of corn. It has the potential to place 36 million to 38 million tons on the international market, as long as the weather helps production.
One of the interesting protocols among those being negotiated is the increase in soybean meal exports.
The Bolsonaro government, with this policy of trying to reduce transport prices at any cost, has disrupted the national biodiesel chain.
When the program resumes the normal mixing rate, which will be 14% (the government reduced it to 10%), the country will have to export soybean meal, and China may be a good market. Soybean is responsible for 70% of the raw material in the production of biodiesel.
In addition to adding value to soybean meal, Brazil may also add value to other flours, such as fish, which are being negotiated with the Chinese.
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