Arrow Research has published “scale-busting” charts detailing Chinese purchases of American corn over the past week.
Over the past week a record breaking 5.8m tonnes of US corn has been purchased by China for the current marketing year adding fuel to the US corn rally.
“China has long sought to be self-reliant on corn with their tariff rate quota system penalising imports, however recently something has changed,” Arrow stated in a note to clients.
“There are questions over the true size of the Chinese corn reserves and importantly the quality of that corn,” Arrow suggested with rumours circulating that Chinese authorities have unofficially relaxed their tariff rate quota system to ease domestic tightness.
The price of imported corn has been getting cheaper compared to domestic corn throughout 2020, with US corn prices now around half the Chinese domestic price.
With the Brazilian soybean harvest underway, 2021 is expected to be a record year for the seaborne grains market, Arrow is predicting.
Panamax congestion is tipped to pick up this quarter – aided by the many ships already tied up in lengthy queues to ship coal in China and Indonesia. The tightness in the market is also spreading to the supramax and handysize sectors. This congestion is expected to increase on news of strikes by truckers and port workers in Brazil and Argentina kicking off this month.
Meanwhile, containerlines have been rejecting thousands of boxes of agricultural projects, determined to reposition empties swiftly back to Asia amid a record freight rate environment.