Horizons #68: China’s growth leads to more imported grains (and oilseeds)

24 March, 2022

by Professor Ross Kingwell, AEGIC Chief Economist

A structural shift appears underway in China. Its rising per capita wealth is causing dietary change that generates greater dependence on feed grains and oilseeds. China can no longer satisfy its grain and oilseed demand wholly and simply from its domestic supply. As a result, imports of grain and oilseed imports are increasing and imports are forming a larger share of China’s grain and oilseed supply. This is creating new or enlarged structural market opportunities for some Australian grains and oilseeds.

In 2021 China’s imports of grains and oilseeds topped a record 167 mmt. Over 65 mmt of grains were imported and 102 mmt of oilseeds, mostly soybeans. A decade previously China was only importing around 60 mmt of oilseeds (Fig. 1). China’s grain imports in 2021 were up almost 40 mmt from 2020, led by corn imports that increased from 11.3 mmt in 2020 to 28.3 mmt in 2021. For the first time, in 2021 grain imports into China surpassed China’s tariff rate quotas (TRQ). Corn imports were nearly four times the 7.2 mmt TRQ and wheat imports reached 9.77 mmt, slightly more than its TRQ.

Figure 1: China’s imports of oilseeds since 2010

Although oilseed imports continue to dominate grain and oilseed importation into China, nonetheless by far the largest increases in importation in 2021 occurred in grains rather than oilseeds.

Grain and oilseed imports formed 19 percent of China’s total supply (domestic production plus imports) in 2021 (Fig. 2). Yet during 2015-2019 only around 14-15 percent of China’s total supply of oilseeds and grain came from imports. The ramification is that both the absolute volume of imports and their share of China’s total supply of oilseeds and grain is increasing.

Figure 2: China’s imports of oilseeds and grains as a share of its total supply of oilseeds and grains.

The growing volumes of grain and oilseeds being imported by China generate market upsides for Australian grain and oilseed producers. Firstly, Australian exporters , in some situations, could export more grains and oilseeds to China due to the magnitude of its growing demand. Secondly, even if Australia cannot directly share in the demand growth in China, nonetheless the volumes of grain from other exporters delivered to China, potentially frees up other markets that previously may have been served by these same grain exporters. In this last situation Australia indirectly benefits by being able to export more grains and oilseeds to these other markets now less well-served by other exporters due to their focus on China.

Photo: fresh oat noodles being made in China.

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Horizons: the AEGIC Economics and Market Insights blog

Expert grains industry analysis and commentary from AEGIC’s Economics and Market Insight Team on a range of big-picture topics that affect Australia’s export grains sector.


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