China and Brazil in late-May signed an agreement that will allow for the import of Brazilian corn that will be allowed to begin as soon as the country implements certain requirements. Brazil’s local corn growers association Abramilho says it will also require an agreement with China about genetically modified grains before effectively beginning, which China is allegedly eager to sign. The new policy is part of China’s continued push to diversify its food supplies, which could also soon include expanded access for Brazilian soybean meal and soy protein concentrate.
China has not typically been a big corn importer but that has changed in recent years. China is actually the second-largest corn producer in the world behind the U.S., with Brazil coming in a distant third. Despite efforts, however, China has been unsuccessful at meaningfully increasing its own production. Corn yields in China are about 60% of U.S. levels which is largely attributed to the country’s prohibition on domestic GM crop cultivation.
At the same time, China’s feed grain demand has risen substantially the last few years as its hog industry has recovered and meat demand in general has continued to climb. Demand for Chinese corn-based ethanol is also expected to expand as the country implements rules requiring gasoline to include a 10% ethanol blend. By some estimates, China could need another 36 million metric tons of corn a year just to make ethanol.
Ukraine has recently supplied as much as a third of China’s corn imports with the U.S. mostly covering the balance. But as Russia’s invasion of Ukraine has made shipments out of Black Sea ports unreliable, China is keen to replace those supplies and reduce the risk of relying solely on the U.S. for corn.
According to reports, the deal with Brazil is intended to initially replace at least part of Ukraine’s supplies, but could later expand to take share away from U.S. exporters. The U.S. is the world’s top corn exporter and China currently accounts for about of quarter of that volume. Brazil is the world’s second-largest corn exporter.
Formal approval of the deal still hinges on getting a green light from China’s Agriculture Ministry, in addition to finalization of phytosanitary requirements that will allow for GMO imports. Genetically modified corn varieties account for 90% or more of Brazil’s corn production, while Ukraine is largely a non-GMO provider. Brazil corn grower’s association Anec says it will take about three months for the government to revise phytosanitary requirements before exports could begin.
Brazil’s most recent corn exports to China reached 35,000 metric tons in April 2022, which were the only corn exports to China since 2019. According to traders, Chinese importers have mostly avoided Brazil corn because of long shipping times and high freight costs, which is compounded by the complicated approval process for importing GMOs. The new phytosanitary agreement will allegedly aim to streamline the GM approval process. Additionally, most Brazil corn purchases are expected to be made by the Chinese government for the country’s national stockpiles.
Critics of the deal point out that China and Brazil signed a similar “protocol of phytosanitary requirements” for exporting corn in 2014 but little trade actually occurred. Some may recall that the 2013-14 season was the same year that Chinese authorities rejected nearly every U.S. corn shipment due to the presence of an unapproved GM variety. That came at a time when China was facing a rapidly growing corn glut and often used technical transgressions like unapproved GMOs to throttle imports. China began a multi-year campaign to draw down those stocks in 2025 and completed the process in 2020. Meaning it no longer has huge corn reserves to lean on. China’s imports climbed significantly in 2020-21 to 29.5 million metric tons from just 7.6 million in 19-20 and 4.5 million in 18-19. USDA pegs the country’s imports in the current marketing year at 23 million metric tons and 18 million in 22-23. (Sources: Platts, Financial Times, USDA, DimSums)
