China Buys Most U.S. Corn Since 1994, Edging Toward WTO Quotas
(Bloomberg) -- China made its largest purchase of American corn in more than two decades and the second-biggest ever, taking the Asian nation closer to meeting or exceeding import quotas set by the World Trade Organization.
American shippers sold 1.365 million metric tons of U.S. corn to China, the U.S. Department of Agriculture said in a statement Friday, which according to agency data would be the biggest daily sale to China since 1994. The announcement comes after Bloomberg reported Chinese authorities issued a new batch of permits that allow imports at lower tariffs.
The purchases put China closer to surpassing a WTO target for imports of 7.2 million tons of corn from any country a year. It also helps China fill its pledges under the phase one deal, in which Beijing agreed to buy $36.5 billion in agricultural commodities this year, up from $24 billion in 2017.
“The combination of the unexpected demand and increased weather risks over the next couple of weeks will continue to make the bears nervous, while starting to create visions of dancing bulls in the minds of farmers.” said Arlan Suderman, chief commodities economist at brokerage StoneX.
While China is speeding up corn purchases, tensions between Washington and Beijing have been on the rise in recent months, with President Donald Trump blaming the Asian nation for misleading the world about the scale and risk of the coronavirus outbreak, and more recently criticizing China for imposing a controversial new national security legislation on Hong Kong.
On Friday, Trump said a phase two deal was not being considered.
“I don’t think about that,” Trump said when asked if a second phase would no longer happen. “The relationship with China is severely damaged.”
China had already issued about 6.3 million tons of corn import quotas by the end of April and it’s possible that if all permits issued in this latest round are filled, total low-tariff imports will go above the WTO quota, people familiar with the matter said earlier this month.
The majority of the corn purchased, or 765,000 tons, was for delivery this season, with the remained for 2020-21, the USDA said. China also bought 190,000 tons of hard red spring wheat and 130,000 tons of hard red winter wheat, both for delivery next season.
Corn futures traded in Chicago fell 3.6% to $3.3625 a bushel as the weather turned cooler and wetter.
©2020 Bloomberg L.P.