China's H1 Grain Imports Spike, On Path To Use Up Annual Quotas
China has accelerated grains buying from abroad in the first half of 2020 and may fully use up its annual quotas for corn and wheat imports for the first time ever, traders and analysts said this week.
China, the world's top agricultural market, imported 3.66 million tonnes of corn from January to June, 51% of its annual quota for the grain set at 7.2 million tonnes, according to customs data released on Thursday.
Wheat imports came at 3.35 million tonnes, 35% of its yearly quota at 9.64 million tonnes, the data showed.
Last year, China only used 67% of its annual quota for corn and one-third of its yearly wheat quota.
Surge In Imports
The import surge has increased expectations that China will fully use up its corn and wheat quotas for the year for the first time, said a source with knowledge of China's agricultural buying.
"The market is expecting China to import close to 10 million tonnes of corn this calendar year," said the source, who declined to be named because of the sensitivity of the matter. "Mainly to fulfil the phase 1 trade deal with US."
China has stepped up purchases of US farm goods in recent weeks, including booking record volumes of corn, for delivery in both the 2019/20 and 2020/21 crop year.
Tightening Domestic Supplies
The move also follows gains in Chinese corn prices because of tightening domestic supplies and falling stockpiles.
"Not all of that (US corn) necessarily will get shipped in 2020, but given the volumes it seems like China can fill the tariff quota for corn," said Darin Friedrichs, senior analyst at StoneX.
Importers have also been actively buying wheat from US and Australia lately, said two Chinese grain traders.
"Chances are high that China will be close to using up all the annual TRQs for wheat this year," said one of the traders, based at a state-owned firm.
China allows a certain volume of imports of rice, corn and wheat through a tariff rate quota (TRQ) system, under which importers can buy specified volumes with duties as low as 1%, compared with 65% without the quotas.