China's surging grain imports from the U.S. reflect nationwide needs, not just the trade agreement

We first signaled on July 24 that early "stocking up" grain purchases by Chinese importers reflected grain user's concerns about flood-damaged crops across China, plus rebuilding the nation's hog herd. Soon after, corn and soybean price charts began a months-long climb — even though China's official government stance was "no problem with supply."

As November opens, one of China's largest business newspapers, Caixin Global, reports: "China is accelerating its agriculture purchases from the U.S. with imports of several goods at all-time highs. The U.S. government hailed the deals as “historic results for American agriculture” despite mounting animosity between the world’s two largest economies."

The Caixin Global report by Gavin Cross continued:

"As of October, China had bought over $23 billion in U.S. agricultural goods this year, or about 71% of the annual target set under the two countries’ Phase One trade agreement, according to the Office of the U.S. Trade Representative (USTR) and the U.S. Department of Agriculture (USDA). As part of the trade deal, China promised to increase its purchases of U.S. agricultural products by $32 billion over the following two years from a 2017 baseline. 

"The $23 billion figure, which includes purchase contracts that have not yet been completed, indicates that the U.S. is likely to achieve its best-ever annual sales of agricultural goods to China this year, according to the report.

"Sales of U.S. corn, soybeans and pork to China all saw record highs this year, with pork exports hitting an all-time record in just the first five months, the report said. Chinese officials have also encouraged grain traders to import more from the U.S. to help the government meet its commitments, industry insiders told Caixin."

Caixin quoted USTR representative Robert Lighthizer as saying, "Since the agreement entered into force eight months ago, we have seen remarkable improvements in our agricultural trade relationship with China, which will benefit our farmers and ranchers for years to come."

We've also been tracking Chinese news sources indicating that Chinese farmers are reluctant to sell wheat, corn and soybeans while prices are trending up. There are also rumors that much of the government's corn stockpile is of poor quality. Some market observers are suspecting concerns about food supplies implied in official Communist Party rhetoric. Example: President Xi Jinping's "clean plate" campaign against food waste sounds like a warning that food could become too scarce to waste.

Meanwhile, Reuters reports that multinational grain-trading firms are seeing greater demand for U.S. exports because of the Covid-19 pandemic.  Even Brazil is importing soybeans, indicates the story at this link.