As grain prices reach record breaking highs, the Chinese Communist Party (CCP), is purchasing massive amounts of U.S. corn – the largest purchase since May 2021.
An estimated 1.010 million metric tons of corn was purchased by the CCP, according to the U.S. Department of Agriculture (USDA) and around 680,000 tons will come from old crop and the remaining 340,000 tons will be delivered before the 2022-23 marketing year as China begins to stockpile before other countries.
Editor of Pro Farmer Brian Grete, said “China’s in a hoarding mode right now,’ adding, “Food security is one of their top priorities, if not their top priority, and you just took a chunk out with Ukraine. Ukraine had become a major supplier of corn to China. And I think that we will see China in for more corn.”
Grain prices and particularly corn, is at its highest price since 2012. Price per bushel has hit over $7.83.
The CCP is expected to start stockpiling other grains too as prices soar and last summer the CCP were persecuting agriculture officials, in an attempt to cover up the country’s current shortage. It looks as though China is looking to avoid another occurrence of that and are getting as ahead of the game as possible.
“We’ll probably also see China buying other commodities,” said Grete. “What commodities they have at home, especially wheat, which is about half of the global supply, they aren’t going to push onto the world market.”
“They’re going to keep those themselves. China’s historically a hoarder. And amid the inflating prices around the world, the tightening supplies, they are hoarding even more right now.”
The agriculture minister warned that China’s next wheat crop could possibly be the “worst in history,” but China is saying that in actual fact, it may be far better than what had been projected. Experts still say, however, that this will do nothing to stop China from continuing to hoard goods.
“I think they could come in for the wheat market,” said Mark Gold of StoneX Group. “There’s been some talk about that for a while.”
“Right now, you look at some of the things that have been going on, Egypt is looking for wheat, it looks like it may come out of the Black Sea area, they’ll take the risk of shipping it. We know India’s got a bumper crop, 111 million metric tons, and they intend to ramp up exports dramatically.”
Gold said that it may be too early to predict a coming food shortage – but if you factor in what is currently happening with supply chains and the continuing war in Ukraine – could change Gold’s prediction.
Wheat is grown in other regions of the world, but fertilizer is already becoming a scarce commodity and this will also undoubtedly have a negative effect on an already stressed market.
“We harvest wheat somewhere around the world every month, so I’m just not sure wheat is in as dire situation as maybe corn and soybeans are,” he added.
“Let’s temper that by saying if you look at Texas, Oklahoma and Kansas, Montana, their crops are in bad shape, and not getting much better.”
Crops have taken a hit in Texas this past week though, when high winds and heat damaged the winter wheat crop. There are currently drought-like conditions across the Great Plains.
“Up until this point, some of the irrigated wheat was barely holding on,” reported AgWeb.
“However, the weather this week caused the wheat to already show signs of loss, which could further reduce U.S. wheat supplies.”