Dim Sums: Agricultural Markets in China

Literally turning fields into factories is at the core of China's plan to cover the countryside with "Modern Agriculture Industry Parks" to jump from peasant-type subsistence farming to leading-edge high-tech agriculture. This adventurous great leap utilizes all the fashionable buzz words ("clusters," "incubators," "integration," "innovation," "smart," "green") and the latest engineering. It could turn out to be either a path-breaking approach to agriculture for the 21st century or another white elephant to add to China's herd of ghost cities and bridges to nowhere. Guangdong Province plans to build 100 province-level  "modern agriculture industry parks", including this ambitious design. The first list of 20 "National-level Modern Agriculture Industry Parks" in a dozen provinces was released by the Ministries of Finance and Agriculture and Rural Affairs at a meeting of provincial ag...

China's pork imports through November 2018 were down from a year earlier, reflecting mainly lower offal imports from the United States. Imports of muscle cuts were down less than 1 percent, year-on-year, but imports of offal were down 21 percent. China's African swine fever epidemic has not affected its pork trade yet, but the industry is reportedly shedding production capacity due to disruptions of internal hog marketing and gloomy prospects for controlling the virus. China's pork imports were likely impacted both by domestic market conditions (a plunge in domestic prices earlier in the year suppressed demand for imports) as well as the trade war. The United States supplies predominantly offal (organs, feet, snouts, etc), and the decline in offal shipments from the United States accounts for most of the decline in offal imports. Imports of muscle cuts from other sources did not offset the 68,495 metric-ton decline in imports of U.S. muscle cuts. China ...

China relied even more heavily on Brazil for its soybeans during this year's trade war. China has not found new soybean suppliers to replace the United States. China's customs data show that China obtained 75 percent of its soybean imports from Brazil during January-November 2018. The 61.7 million metric tons imported from Brazil during those months is up 12.7 mmt from the same period in 2017. Brazil supplied 91 percent of China's soybean imports from July to November--the months when the 25-percent retaliatory tariff on U.S. soybeans was in effect. China Soybean imports, January-November 2018 From: 2017 2018 Change Million metric tons Brazil 49.0 61.7 +12.7 United States 26.7 16.6 -10.1 Argentina 5.9 1.3 -4.7 Uruguay 2.4 1.0 -1.4 Canada 1.5 1.0 -0.5 Russia 0.4 0.7 0.3 Others 0.0 0.1 0.0 Total 86.0 82.3 -3.6...

China's November customs data show the trade war in agricultural products started biting both China and the United States last month. China's imports from the United States were down sharply from a year earlier, and Brazil's supply of farm product sales to China fell off the torrid pace set during the trade war's initial months. During November 2018, the value of China's agricultural imports fell behind its year-earlier value for the first time this year. China's imports of agricultural products from the United States fell to $353 million. That total was $2.48 billion less than the value in November 2017. Brazil was again, by far, the leading supplier of China's ag imports during November, supplying 18 percent of the $10.6 billion total. By comparison, the 27 European Union countries supplied half as much as Brazil--9 percent--and the United States supplied only 3-percent (down from 26 percent in January), a little less than shares supplied by Indonesia...

China's National Bureau of Statistics estimates of 2018 grain output released December 14 show a modest 0.6-percent decline from a year ago. Officials are ambivalent, on one hand explaining that the decline was engineered to correct excess supplies, while also expressing angst about the future course of production and potential threats to food security. The 2018 output of 657.89 million metric tons is down 0.6 percent from 661.6 mmt in 2017. The grain statistics incorporate revisions made after the Bureau's third agricultural census that were incorporated in the 2018 China Statistical Yearbook released last month. (An estimate of 617.9 mmt for 2017 had been released earlier this year--prior to revisions). China's official definition of "grain" (traditional food crops, although corn and soybeans are now used primarily as animal feed) includes cereals, soybeans and other beans, and tubers Soybeans are included in the "bean" category; the soybean output...

Some Chinese soybean farmers have not been getting paid for their crop, according to an article in China Business Reference News that was reposted on numerous sites last week. According to investigations in Heilongjiang Province, bankrupt crushing plants have failed to pay traders who, in turn, were unable to pay for soybeans they purchased from farmers. Farmers say they call the traders over and over to collect on their IOUs, but the traders claim to have no money to pay or they just disappear. The article says quite a few soybean farmers have been unpaid during the last two years. In many cases, traders from other provinces like Hebei and Henan contact farmer cooperatives in Heilongjiang to buy soybeans. They promise payment in 2 or 3 days and transport the soybeans to a warehouse in a coastal location. There, the soybeans are used as collateral to obtain loans. When those loans fall into arears, traders are unable to pay farmers on time. One farmer said he had been promised payme...

Chinese authorities announced a reduction in next year's floor price for wheat, despite poor profits from this year's wheat production. Authorities face a challenge of reducing their intervention in the wheat market while guarding against farmers abandoning the crop. On November 16, China's National Development and Reform Commission announced that the minimum price for the 2019 wheat crop would be set at 112 yuan/50kg (equal to 2240 yuan/mt or about $320/mt), down from 115 yuan/50kg (2300 yuan/mt) this year. This is the second year in a row the Commission has cut the wheat price by a relatively modest 3 yuan/50g (less than 3%) after holding the minimum price steady at 118 yuan from 2014 to 2017. In a press conference, the Commission explained that the minimum price needs to be brought into line with market prices to eliminate big gaps between Chinese and foreign prices. The Commission explained that the minimum price will be restored to a floor under the market price-...

China has increased its agricultural imports this year despite largely snubbing products from the United States. Calculations using China's customs statistics indicate that China imported $10.3 billion of agricultural and food products during October 2018, up from $9.3 billion in October last year, a $1.6-billion year-on-year increase. China's imports of ag products from the United States during October were $866 million less than a year earlier. The decline in imports from the U.S. will become even more prominent during November-January if China is able to continue avoiding imports of U.S. soybeans during those months--usually the peak season for U.S. soybean supplies. Brazil has played a dominant role in keeping China supplied with soybeans. China's October ag imports from Brazil doubled from a year ago. The $1.65-billion year-on-year boost in purchases from Brazil was also twice as much as the year-on-year drop in imports from the United States. Brazil was, by far, t...