China to allow imports of Brazilian corn to replace imports from Ukraine
CHINA—China’s customs authority finalized an agreement to allow imports of Brazilian corn, lining up an alternative to U.S. corn to replace imports from Ukraine. A further sign of how the Russia-Ukraine war is reshaping global trade flows.
Ukraine first began shipping corn to China in 2014 and by last year provided nearly one-third of all China’s corn imports. Russia’s invasion of Ukraine has disrupted crop shipments from the Black Sea and China and other countries have been scrambling to find alternate suppliers.
Currently, almost all of China’s corn imports come from the United States and Ukraine but According to analyst Paulo Molinari, “This year it (China) has already met its demand that came from Ukraine, replacing it with American corn.”
A China-based trader who declined to be named as he was not authorized to talk to the media said that this agreement with Brazil “was strategic consideration by the state to diversify imports origins.”
The U.S. accounted for nearly 70% of China’s corn imports last year and the U.S. share had been expected to increase due to the need to find alternatives to Ukraine, the trader said.
True enough, traders reported that the agreement helped push down Chicago Board of Trade corn futures by 1.8% on Tuesday. Beijing’s deal with Brazil will initially be aimed at replacing at least part of Ukrainian imports.
But in the longer term it could potentially take export share away from the US and encourage further corn planting in Brazil and China can also emerge as a rival to buyers from the European Union seeking imports of corn from Brazil.
“This is a big move,” said Terry Reilly, senior commodity analyst for Futures International. “It’s a shift in global trade flows.”
China’s Ministry of Commerce said in a release That “The General Administration of Customs of China and the Brazilian Ministry of Agriculture signed the Protocol on Phytosanitary Requirements for exporting Brazilian corn to China (revised edition).”
However, a market source added that no imports can happen yet because of existing intrinsic differences between the allowable GMO events into China and those that are present in Brazilian corn.
According to Glauber Silveira, executive director, Brazilian corn growers’ association, Abramilho, the Chinese are keen to sign a “biotechnology equivalence” agreement for transgenic corn to allow trade with Brazil.
Genetically modified corn has accounted for about 90 per cent of the total corn area in Brazil since the 2015/2016 season. In the current cycle, Brazil is poised to harvest a record corn crop, meaning the country has a nearly 30 million tonne surplus to export to destinations including China.
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