Dim Sums: Agricultural Markets in China

Canadian pork will reach Wuhan consumers in record time as customs and port authorities concentrated their efforts to expedite the shipment. According to Chinese State T.V. , six refrigerated containers of chilled pork purchased by China's State-owned COFCO Group reached Shanghai's Yangshan port on March 28 (Chinese video here ). State-owned shipping company COSCO's general manager said their "direct service" shortened the time from factory to consumer. The meat's journey from Canada's Vancouver port to Shanghai took 14 days. Shanghai port inspectors check Canadian pork against electronic documents. The port prioritized unloading, documents were transmitted directly to customs officials, and a special inspection area was set aside to achieve a "zero waiting time" process. The containers were on their way to Wuhan 24 hours after arriving at the Shanghai port.

Agricultural worries threaten to undermine China's grand plan to eliminate rural poverty in 2020. Journalists warn that Chinese farmers need higher subsidies to prevent them from abandoning grain production, and rice and soybean supplies from abroad could be interrupted during the covid-19 crisis. African swine fever has decimated pork supplies, spring weather conditions look bleak, fast-moving "fall army worms" threaten to gobble up crops, and desert locusts are swarming on China's back doorstep in South Asia. An already-fragile spring planting period may be worsened by disruptions of farm input distribution and displacements of labor due to covid-19 lockdowns. The communist party's "Document No. 1"--composed last December but not released until early February--focused on "resolutely win[ning] the war on poverty" and achieving a "comprehensive all-round well-off society" in the target year of 2020. The document contained initiative...

China's State-owned companies significantly increased their purchases of U.S. soybeans, while other Chinese companies bought mainly from South America last year. China's customs data show that soybean imports by Beijing-based companies--which include state-owned COFCO, Sinograin, and Chinatex--reached 22 million metric tons last year--10 mmt more than they had ever imported in previous years. Meanwhile, imports by companies registered in other Chinese provinces dropped by a nearly-equal amount of 9.7 mmt. Beijing-based companies accounted for nearly 25 percent of China's soybean imports last year, about double their share in earlier years. Another cut of the data shows that the boom in Beijing soybean purchases reflects a shopping spree for U.S. soybeans. Beijing companies bought 14.1 mmt of U.S. soybeans in 2019, up 11.9 mmt from the 2.2 mmt they purchased during 2018. Beijing-based companies' purchases of South American soybeans dropped by about 2 mmt. In co...

Distant observers presume that China can easily grow more soybeans in Russia to replace imported  American soybeans. On the ground there are a lot of obstacles to overcome, and Chinese farmers accustomed to pervasive subsidies at home are requesting financial aid and more efficient customs clearance to help them with their ventures in Russia. They also want relief from tariffs and taxes on imports designed to insulate domestic crops from imports. The June 2019 "strategic partnership" agreement between Russia and China included a provision to promote production and trade in soybeans between companies in China's northeastern Provinces and Russia's Far East and Baikal Regions. In July 2019, China's customs authority gave a "green light" by approving imports of soybeans from all parts of Russia. This was quickly followed up by a 4,400-metric-ton shipment of soybeans to the Jiangsu Province port of Nantong arranged by the two countries' agricultural ...

The decline in China's animal feed output during 2019 was relatively modest in comparison with the plunge in pig numbers as a surge in poultry feed offset part of the decline. Two out of three data sources say China's feed output dropped in 2019. China Feed Industry Association numbers say feed output fell 3.7 percent while the Alltech global feed survey estimates the decline at 10.6 percent. China's National Bureau of Statistics is the outlier with a 1.2-percent increase. The estimates covered a wide range of nearly 100 million metric tons between Alltech's estimate of 167.9 mmt and National Bureau of Statistics estimate of 261.8 mmt. Chinese feed statistics are more like impressionist paintings than engineering blueprints, so don't expect any precision from these numbers. Measures of China's animal feed production, 2019 Source 2019 output Growth MMT Percent China Feed Industry Association 228.9 -3.7 Chin...

With obscene profits to be made, China's swine farmers are scrambling to buy scarce piglets, driving their prices to crazy-high levels. Soaring piglet prices are the most obvious indicator of a ballooning cost structure that is likely to lock in ever-higher Chinese meat prices for the future. While live hog prices have come down slightly in early March, the price of piglets is still rising. The Ministry of Agriculture's average wholesale price for a piglet in the last week of February 2020 was RMB 84.07/kg, up RMB 9/kg from the first week of January and RMB 60/kg higher than the price in February 2019. One article reports prices of RMB 1700-1800 for a 7-kg piglet. Another article reports prices of over RMB 2000 for 15-kg piglets and comments, "While you've been buying face masks, giant pig farms have been scrambling to buy pigs." Wens Company, China's largest swine producer, announced it will award managers a cash bounty for every piglet they buy through t...

China announced an increase in its minimum price for indica rice and is encouraging production of the early-season rice crop that are reversals of recent rice policies. The early-rice directive is alternately viewed as a measure to stem the decline in rice output and as a countercyclical rural employment program for migrant workers trapped in their villages. This year's policy also includes an apparently symbolic upper limit on rice procurement that might be a gambit to bring the minimum price policy into compliance with WTO rules without making any material changes in the program. A notice on this year's minimum prices for rice issued February 28 by the National Food and Strategic Reserves Administration announced minimum prices of 2420 yuan/metric ton for early indica rice, 2540 yuan/metric ton for middle and late indica rice, and 2600 yuan for japonica rice. The indica (long grain) minimum prices were raised by 20 yuan/mt from their 2019 values. These were the first incre...