In 2024, the United States has seen a fruitful corn harvest this year, with not enough to fill a ship for export to China. This is the latest example of the impact of slowing demand from the mainland on commercial confidence, leading to a sharp decline in China’s imports of major agricultural products.
According to Bloomberg on Sunday, September 15, France’s exports of barley to China have also been declining, and wheat growers in Australia may be feeling nervous as they prepare to start harvesting new wheat in the coming weeks.
Data from the US Department of Agriculture shows that as of September, the US has only sold 13,400 metric tons of corn to China, compared to over 564,000 tons during the same period last year. US exports to China have dropped by 63% for the 2023-2024 period. Shipments to China from Brazil have also decreased.
Reports cite estimates from some Chinese agricultural experts, projecting that for the 2024-2025 period, China’s demand for overseas corn may decrease by more than half (9 to 11 million tons), and wheat imports may drop by over 30% (7 to 9 million tons).
The slowdown in the Chinese economy and the sluggish real estate market have hit consumer confidence, forcing thrifty households to reduce meat consumption and forgo dining out, which in turn has suppressed the amount of crops needed to feed livestock. It is reported that the average profit of major catering enterprises in Beijing plummeted by 88% in the first half of the year.
It is expected that China’s reduction in imports of major agricultural products from overseas will not change in the short term, as the dual impact of an aging population and cooling economy suggests a less optimistic outlook for the future. Despite concerns for food security, China is likely to continue robust imports in the coming years, but the rapid growth of the past two decades may have come to an end.
Ivy Li, a commodity market analyst at StoneX in Shanghai, told Bloomberg, “People are becoming increasingly pessimistic about the economy and demand.”
“Importers are very cautious, and the purchase speed will slow down in the future, with more emphasis on procurement as needed,” she said. “The effects of collapsed confidence are pervasive.”
Meanwhile, Beijing is requiring traders to limit the overseas purchase of corn, barley, and sorghum to alleviate the pressure of oversupply exacerbated earlier this year due to the rush to buy inexpensive crops from abroad.
Beijing is also taking measures to reduce the use of soybean meal in animal feed. Soybeans are one of the agricultural products in China for which domestic production falls far short of demand even with slowing demand. Brazil and the United States are the major soybean exporting countries.
Earlier this year, due to low soybean prices, Brazil set a record high for exports to China, used for cooking oil and pig feed. However, looking ahead, the soybeans delivered by the United States to China so far in the 2024-2025 season are less than 5 million tons – the lowest level in 16 years excluding the trade war in 2018-2019, a 25% decrease compared to the previous year.
Paulo Sousa, CEO of Cargill, a Brazilian grain trading company, told Bloomberg, “China’s demand is not as strong as it used to be, we have not seen the notable growth as in previous years.”
The economic prospects of China remain dim, with signs of spiraling inflation and the 5% official annual growth target for the year being out of reach.
Analysts from Bloomberg Economics and BNP Paribas and other banks have suggested that deflation in China may persist until 2025, marking the longest deflation cycle with data available since 1993.
The Wall Street Journal states that even if the Chinese Communist Party takes action, it cannot steer the country’s economy towards a more sustainable growth trajectory, such as improving domestic consumption demand, implementing structural reforms, and undergoing fundamental shifts in thinking. Under the rule of the Chinese Communist Party, this is fundamentally unattainable.