The list of permitted Brazilian corn exporters was revised by Chinese customs on Wednesday, a step that, according to a Brazilian agricultural official, might help kickstart sales of maize to the world’s second-largest economy.
The approvals have the potential to change global trade patterns, which may lead to less sales for farmers in the United States, which is now the leading supplier of maize in the world. China used to get the majority of its maize supply from the United States and Ukraine; however, Russia’s invasion of Ukraine has caused a disruption in grain shipments.
“Having (additional) markets to ship goods to is a fantastic option for Brazil,” said Glauco Bertoldo, who works as an inspections director for vegetable products at Brazil’s agricultural ministry. “It is a nice alternative for Brazil.”
In a recent interview, he said that the list of authorized Brazilian facilities that are allowed to export maize to China may be revised in the coming weeks to include more units.
136 corn export facilities were included on the new list that was published on the website of China’s General Administration of Customs. These facilities were owned by companies such as Archer-Daniels-Midland Co. (ADM.N), Bunge Ltd. (BG.N), Cargill, Louis Dreyfus Company, and Cofco International, among others.
Cofco refused to comment. Requests for commentary from other exporters were not immediately met with a response.
Once China begins purchasing maize from Brazil, previous corn importers from Brazil, such as Spain and Egypt, may begin shifting part of their grain purchasing to the United States once China begins doing the same.
According to Craig Turner, a grain dealer with StoneX, “There will definitely be some horse trading, but in the end, China is going to wind up purchasing more maize from South America and less corn from the United States.”
There is a possibility that China may start importing some Brazilian coffee in a limited capacity shortly, but major shipments are not anticipated until the following crop gets underway in early 2023, he noted.
In 2014, Beijing and Brasilia had signed a convention enabling the sale of maize from Brazil to China; but, due to the complicated inspection procedures, there had been very little commerce between the two countries.
During discussions in May, the nations came to an agreement on a new protocol. These discussions took place just a few months after Russia invaded Ukraine.
According to a document that was uploaded onto the website for China’s customs, the Chinese government has published a list of the 14 Brazilian facilities that have been granted permission to export soymeal to the country. Among the facilities on the list are those that are owned by Bunge Ltd. and Olam.
A request for comment was sent to Olam, but they did not react right away.
According to merchants and experts, the level of demand for soymeal is forecast to remain low in China since the country’s domestic production capacity is so high.
According to the information provided by China’s Ministry of Agriculture, the country is planning to bring in 18 million tonnes of maize for the crop year 2022/23, which started in October.
Since China’s imports from Ukraine dropped to fewer than 2,000 tonnes in September of this year, the country is now dependent on the United States to provide the majority of its supplies sourced from elsewhere.