Tuesday, February 27, 2018

China 2017 Ag Imports: Sucking Sound and Squealing Brakes

If you couldn't hear the great sucking sound of China hoovering up agricultural commodities, it may have been because it was drowned out by the chugging of industrial exports. Or maybe your ears were hurting from the squeal of brakes applied to particular farm commodities targeted for antidumping or safeguards.

China's imports of agricultural products were valued at $125.9 billion during 2017, up 12.8 percent from the previous year, according to data reported by the Ministry of Agriculture. Agricultural exports totaled $75.5 billion and rose 3.5 percent.

According to the Ministry of Commerce, agricultural imports represented 6.8 percent of the value of all Chinese imports in 2017, while agricultural exports accounted for 3.3 percent of all exports. The brief Commerce Ministry report emphasized that the $49.5-billion deficit in agricultural exports grew 30 percent from the previous year. It did not mention that the deficit in agricultural trade is relatively modest in comparison with China's overall trade surplus of $422.5 billion.

Nor did the MofCom report on ag trade mention numbers in another MofCom report which showed the overall trade surplus (in Chinese yuan) grew 14.2 percent. While Chinese officials will sound alarms about the 12.8-percent increase in agricultural imports, this was a slower rate of growth than the 15.9-percent growth in all imports (in dollars).

Oilseeds ($43 billion) accounted for about a third of the value of China's agricultural imports during 2017. Oilseed import value was up 16.2 percent. Imports of edible oils totaled an additional $5.7 billion, and rose 12.5 percent. Imports of cereal grains totaled $6.5 billion, and rose 13.7 percent. China spends more on importing fruit than it does on importing cereal grains (see below).

Cotton imports totaled $2.36 billion and rose by 32.7 percent, the fastest rate of growth of the major categories (mostly due to higher prices).

Livestock products are the second-largest agricultural import category, with $25.6 billion, up 9.5 percent during 2017. China's leading agricultural export ($21.2 billion) was fish and shellfish, but it also is an importer ($11.35 billion) of aquatic products. Exports of vegetables totaled $15.5 billion. Exports of fruit totaled $7.1 billion. However, China also imported $7.6 billion of tropical and southern hemisphere fruits.

China 2017 value of agricultural imports and exports
Imports ($bil)
Growth (%)
Exports ($bil)
Growth (%)
Agricultural products
Edible oils
Livestock products
Aquatic products

China's agricultural import volume rose at a robust pace overall, but imports of a few items declined sharply due to Chinese policies.

Cereal grain imports totaled 25.6 million metric tons (mmt), up 16.4 percent. Barley imports were up 77.1 percent, wheat imports were up 29.6 percent, and rice imports were up 13 percent during 2017.

However, imports of corn, DDGS, and sorghum were all down sharply. Each of these is a substitute for corn -- disposal of huge government corn stocks was a priority for Chinese rural policy during 2017. DDGS imports -- hit by anti-dumping and anti-subsidy duties in 2017 -- were down 87 percent. Similar duties are expected to hit U.S. sorghum in 2018.

Despite the efforts to choke off these imports, combined imports of corn and substitutes (barley, sorghum, DDGS, cassava) totaled 25.3 mmt during 2017, almost the same as the 25.6 mmt total reported for 2016.

China has prioritized a similar stock disposal program for rice in 2018. The disposal of rice stocks began during 2017 with rice exports surging from under 400,000 mt in 2016 to 1.2 mmt during 2017.

A surplus stock disposal effort for cotton has been underway for three years. Cotton import volume during 2017 was 1.36 mmt, up 9.9 percent from 2016 when cotton imports were in lockdown mode. During 2016 cotton imports were held to the quota set in China's WTO accession commitments in 2001 when the textile industry was a fraction of its current size. Cotton imports bounced back a little during 2017 but are still lower than any year from 2004 to 2015. Yarn imports -- a substitute for cotton -- were stable in 2017.

The volume of imported sugar (2.29 mmt) was down 25 percent after the out-of-quota tariff was boosted from 50 percent to 95 percent and a special safeguards investigation was launched during 2017...and the government is trying to dispose of excessive stockpiles.

While Chinese officials obsess over grains, the country's voracious appetite for grease is reflected by 95-mmt of soybean imports for the calendar year (up 13.8 percent), plus rapeseed imports of 4.75 mmt (up 33 percent), palm oil imports of 5.1 mmt (up 13.4 percent), rapeseed oil imports of 757,000 mt (up 8.2 percent), and soybean oil imports (up 16.6 percent). Sunflower oil imports of 745,000 mt were the only item in this category whose import volume fell (down 22.1 percent).

China's imports of pork (1.2 mmt) and pork offal (1.28 mmt) were both down in 2017 as domestic prices plunged from record highs reached in 2016 and a bevy of domestic pig-supply companies expanded aggressively to grab market share after the departure of backyard farmers. Imports of beef, mutton, and milk powder were each up in double digits. The opening of China's market to U.S. beef last year was not a factor in these numbers. Nearly all the imported beef was supplied by Brazil, Uruguay, Australia, and Argentina while the United States remained a tiny supplier.

China 2017 volume of agricultural imports
Item Imports (1000 mt) Change (%)
Cereal grains 25,601 16.4
Wheat 4,422 29.6
Corn 2,827 -10.7
Rice 4,026 13.0
Barley 8,863 77.1
Sorghum 5,057 -23.9
DDGS 391 -87.3
Cassava 8,128 5.5
Cotton 1,363 9.9
Yarn 983 0.8
Sugar 2,290 -25.2
Soybeans 95,526 13.8
Rapeseed 4,748 33.2
Palm oil 5,079 13.4
Rapeseed oil 757 8.2
Sunflower oil 745 -22.1
Soybean oil 653 16.6
Pork 1,217 -24.9
Pork offal 1,282 -14.1
Beef 695 19.9
Mutton 249 13.1
Milk powder 1,040 22.9

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