China's global "grain grab" is making headlines in the media. According to a Reuters report quoting China's import data, China's imports of barley, corn, sorghum and wheat increased by 83.3% year-over-year to 20.86 million metric tons in the Jan. through Sept. 2020 period.
This month's USDA's World Agricultural Supply and Demand Estimates (WASDE) report shows an increase in the forecast for China's coarse grain imports from 18.75 mmt to 26.05 mmt for 2020-21, up from 17.05 mmt imported in 2019-20. The largest increase was in corn, with forecast imports revised from 7 mmt to 13 mmt this month, while the USDA also revised barley imports from 5.3 mmt to 6.5 mmt. This volume is up 8.9% from 2019-20, while 2.3% lower than the five-year average. In 2014-15, the USDA reports that China imported 9.859 mmt of barley.
Canada is certainly benefitting from this increased movement. Official Statistics Canada data shows 383,393 metric tons shipped in August/September of this crop year, of which 301,067 mt or 78.5% was destined for China. This compares to 89,119 mt shipped to China in the first two months of 2019-20.
The attached chart shows licensed exports through Canadian facilities during the first 14 weeks of the 2020-21 crop year. As of week 14, or the week ending Nov. 8, exports total 946,700 mt, up 105.9% from the same period in 2019-20 and 109% higher than the three-year average. In 2019-20, Statistics Canada reports that Canada exported 2.345 million metric tons of barley, along with an additional 708,200 mt of barley products. Current AAFC forecasts call for the country to export 3 mmt of barley and barley products in 2020-21, slightly less than realized in 2019-20. The current pace of movement seems overlooked.
Despite the increased volumes of coarse grains being exported to China, both the USDA and the International Grains Council are forecasting global barley stocks to rise year-over-year. The USDA's November estimates include forecasts for barley stocks rising by 1.3% to 20.080 mmt, or the highest level in four years. Increased demand for Canadian supplies is a function of Ukraine's exportable volumes falling by 1 mmt year-over-year, according to USDA estimates, while China's trade actions against Australian barley imports has opened the door wider for Canada. Like AAFC, the USDA has estimated Canada's export potential for 2020-21 at a volume similar to 2019-20.
This pace of movement bears watching, as does Statistics Canada's final production estimates to be released on Dec. 3. Saskatchewan Agriculture's provincial average yield for barley is 4 bushels per acre (bpa) higher than the current official Statistics Canada estimate, while Alberta Agriculture's dryland yield estimate is 0.7 bpa higher than Statistics Canada's official estimate for the province. An upward revision in production may increase supplies and limit competition between the feed and export demand.
Cash trade reported for Lethbridge reported by the Market Place Commodities broadcast is at $265/mt, which reflects an easing from some trades as much as $10 higher in recent weeks.
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