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China Buys Most U.S. Corn in 5½ Years as Trade War Persists
By Karl Plume
CHICAGO, March 22 (Reuters) - Chinese importers booked their largest U.S. corn purchase in at least 5½ years, the U.S. Department of Agriculture (USDA) said on Friday, a rare sale of the grain in the middle of the U.S.-China trade war.
The USDA, via its daily reporting system, said private exporters sold 300,000 tonnes of the grain for shipment in the 2018/19 marketing year, which ends on Aug. 31.
The grain will be shipped from April to July, two traders said.
Concerns about widespread flooding in the central United States, and probable logistical challenges shipping grain from the Farm Belt to export markets, likely triggered the purchases, traders and analysts said.
“If the flooding continues, it’s going to be harder and harder to get the corn out of the Gulf. It will have to come out of the Pacific Northwest,” said Mike Zuzolo, president of Global Commodity Analytics.
“You have to tack on quite a bit of transportation cost if you ship it across Fargo over to the Pacific Northwest like we do the soybeans,” he said.
Freight costs for moving grain by barge on the Mississippi River to Gulf Coast export terminals already jumped this week and navigation on some sections of the key shipping waterway are likely to remain restricted as floodwaters flow to the Gulf.
Although China is home to the largest hog herd in the world, it is not a large importer of the livestock feed grain. Beijing had committed to buying only 166,328 tonnes of U.S. corn in the 2018/19 marketing year before Friday’s announcement.
Friday’s announcement is China’s largest U.S. corn purchase since at least October 2013, according to USDA data. That year was the last time China bought significant volumes of U.S. corn, with more than 3.6 million tonnes of imports.
The two countries have levied tit-for-tat tariffs on each other’s goods since last summer in a trade war that has roiled commodities markets and shifted global trade flows. Washington and Beijing have been negotiating a trade agreement since December.
In a television interview on Friday, U.S. President Donald Trump said negotiations with China were progressing and a final agreement “will probably happen,” adding that his call for tariffs to remain on Chinese imports for some time did not mean talks were in trouble.
U.S. Trade Representative Robert Lighthizer and Treasury Secretary Steven Mnuchin plan to travel to China next week for another round of trade talks with Chinese Vice Premier Liu He. (Reporting by Karl Plume and Mark Weinraub in Chicago; editing by David Gregorio and James Dalgleish)
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