corn purchaser, had also bought more than 1.808 MMT of corn (71.18 million bushels) for the new marketing year as of May 20.
Some of China’s recent purchases of U.S. corn will likely go into the country’s state reserves, but much will go directly to the feed and livestock industry, USGC reports.
With these temporary reserves depleted, Lohmar said private end-users are more exposed to supply shocks and, therefore, may be increasing their own private stocks and pipelines.
“The concern over depleted temporary reserves and greater exposure to supply shocks may be affecting official reserve decisions, too, so they may also be growing,” he said. “We just don’t know.”
Bryan Lohmar, U.S. Grains Council director in China, said corn feed demand in China has also increased due to the expansion of poultry production and the Chinese government’s aim to modernize its pork production. U.S. corn imports have been going directly to feed mills to support this demand.
While stock replenishment suggests some corn demand is short-term and will not continue in future years, he said a large amount of wheat and rice going into feed rations could indicate that feed grain demand growth is real.
“USDA estimates 40 MMT of wheat (1.47 billion bushels) used for feed – far greater than any future year, and estimates at least 9 MMT of rice used for feed, also far greater than previous years,” Lohmar said. “Industry estimates are even greater. But these two food grains are even more sensitive than corn, so many expect that large substitution of wheat and rice into feed rations to replace corn will not last for more than one or two years, providing more opportunity for corn demand growth even as corn stocks rebuilding is satiated.
The United States has also shipped 5.8 million metric tons (228.33 million bushels) of sorghum to China as of May 20, with another 937,400 metric tons (36.9 million bushels) in outstanding sales. Nebraska exported $7 million of sorghum to China in 2019.
Corn Long (Buy) ENTER AT: 722.24 T.P_1: 746.52 T.P_2: 783.05 T.P_3: 827.47 S.L: 646.69
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