Dim Sums: Agricultural Markets in China

Chinese cotton prices have been in a downward spiral since May. In early July, the reported by the National Bureau of Statistics was down 17 percent from its March peak. Last Wednesday the September cotton contract on the Zhengzhou commodity exchange fell 7 percent and the yarn futures price fell 4 percent. A Ministry of Agriculture analysis last month pointed out that Chinese cotton prices are now at an unusually low level below the cost of cotton imported from the world market at a 1-percent "sliding scale" tariff. This summer's price collapse reverses last year's steep gains when Chinese factories roared to life as the world emerged from lockdown, reviving textile orders. Analysts say  Chinese textile orders evaporated in recent months as extended covid lockdowns in China closed many retail outlets in 2022. The demand hit was magnified as China's latest virus lockdowns came during the usual seasonal lull in demand. Companies are slowing their cotton purchases ...

The Economist magazine provoked a furious reaction from China's State propagandists when it tweeted last week that the world's pigs consume more grain than all the people in China. Chinese State media conflated the adjacency of pigs and Chinese people in the same sentence to claim the Tweet was racist. Nearly everyone commenting on Twitter echoed the Chinese accusations of racism, thus successfully diverting attention from the inconvenient truth that China's hungry pigs (and chickens) are in fact contributing to tight grain supplies.  On June 23, 2022  The Economist ran a brief story, " Most of the world's grain is not eaten by humans ," subtitled "Nearly half of all grain is either burned as fuel or eaten by animals" to provide some perspective on this year's tight grain supplies and high food prices.  China's stridently nationalist Global Times was outraged over The Economist's tweet that "In 2019 pigs ate 432m tonnes of grain,...

Heavy metal-contaminated rice has been turning up in China's market for decades. Officials blame bad actors rather than the system that shovels loans to trusted government-run companies with no market discipline, little oversight, and with protection from nosy journalists--except when it suits authorities' interests to unleash the reporters.  This month a husband-wife team was found guilty of selling "poison rice" by a court in the Guangdong Province city of Yangjiang. The couple named Zhu and Yan was sentenced to 15 and 10 years in prison, respectively, and ordered to pay 87 million yuan in penalties. According to news media , over the course of 8 months in 2019 Zhu and Yan purchased 5,884 metric tons of rice with excessive levels of cadmium from a granary in Hunan Province operated by the national grain reserve. Their contract specified that the rice had to be used as animal feed and could not enter the market for human food, but Zhu and Yan were accused of knowingl...

China is waging war on meat and seafood smuggling as authorities pile on barriers to legal imports that include strict approvals, reams of documentation, and onerous covid testing, disinfection and tracking. Chinese state-controlled media have reported a series of smuggler interceptions this year from just about every coastal province. Several articles reveal there is a national crackdown on smuggling underway. Coast guard authorities board a ship in Shandong Province suspected of smuggling in March 2022. Source: Xinhua . Official media reported that the coast guard had intercepted 75 ships smuggling over 8000 metric tons of frozen products from January 1 to March 15 this year.  Local media in Jiangmen City in Guangdong Province reported that the coast guard intercepted two boats loaded with 70 metric tons of beef and tripe packed in white bags on May 25 and 27. The products were valued at 7 million yuan (over $1 million). In April, Guangdong's anti-smuggling office reported 398...

China's agriculture ministry launched a multi-pronged rural investment program in a teleconference broadcast to officials all over the country on June 9. The program is part of a national economic stabilization program ordered by the country's State Council leadership. Local officials were ordered to resolutely carry out orders from the central communist party leadership to: focus on stabilizing grain production  expand soybean and oilseed production  firm up supplies of seeds, land, and machinery as the foundation for agriculture  nurture industry chains that produce, process and market local specialty products  implement a rural construction action plan move ahead on key tasks in agricultural green development  These are all initiatives Chinese officials have already prioritized this year for "rural revitalization." Officials were ordered to raise the political position (of spending on rural projects) and be proactive in addressing "pain points," blockage...

China's wheat harvest is up against Covid lockdowns as officials also cope with burning fields in a "wheat battle."  As the summer harvest swung into high gear in late May, local officials in wheat-growing provinces issued directives that the "summer grain battle" must be won. Urgent orders to both uphold virus-prevention and ensure a good harvest reveal the dilemma Chinese officials face: upholding "zero covid" while also ensuring a big wheat crop.  Zero-covid and food security objectives are in conflict because China's wheat harvest relies on a massive movement of people. Many rural migrants working in cities are unable to return to their villages to harvest and sell their crops due to covid lockdowns, and those who do return must meet strict requirements for registration and prove they are covid-negative. Meanwhile, constant covid-testing must be carried out on crews of wheat-harvesters traveling from village to village to cut the wheat. The mar...

China is on the verge of allowing imports of Brazilian corn. Many observers think China-Brazil negotiations were pushed along by China's expectation of disrupted corn supplies due to the war in Ukraine. If so, the move illustrates China's hijacking of scientific negotiations on pest and plant disease risks for economic and political purposes, the kind of behavior that an earlier generation of trade negotiators tried to stamp out when they set up the WTO trading system. "It was a strategic consideration by the State to diversify import origins," an anonymous China-based trader told Reuters . A commentary by Chinese market analysis group Mysteel  attributed the Brazilian corn agreement to the risk that a relatively "stable" corn import pattern could be disrupted by the war in Ukraine.  What they meant is that Chinese authorities face the prospect of having to import nearly all their corn from the United States if Ukrainian corn supplies are disrupted. Authorit...