Feeding the Hungry Dragon: China Changes Buying Tactics in Volatile Phase of U.S. Grain Run

June 30, 2021

Key Points

  • Since mid-2020, China has purchased large quantities of U.S. grain due to accelerated feed demand, a strong currency, and less product being available for import from Brazil.
  • China will remain an active buyer of U.S. grain through at least the 2021/22 marketing year based on steady pork production and higher slaughter rates.
  • China’s accelerated demand resulted in record high grain prices that peaked in May and have since been extremely volatile.
  • CoBank sees this volatility continuing as China is now buying grain more opportunistically, i.e., on significant price weakness.
  • The current grain run has entered a new phase. An elevated period of price volatility coupled with a continued inverted forward curve means that elevators and merchandisers will require capital discipline and excess liquidity.

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Disclaimer: The information provided in this report is not intended to be investment, tax, or legal advice and should not be relied upon by recipients for such purposes. The information contained in this report has been compiled from what CoBank regards as reliable sources. However, CoBank does not make any representation or warranty regarding the content, and disclaims any responsibility for the information, materials, third-party opinions, and data included in this report. In no event will CoBank be liable for any decision made or actions taken by any person or persons relying on the information contained in this report.

 
 
 
 

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