(WCIA) — China is trying to reduce its cost of feeding livestock and that will mean a cut in its imports of US corn and soybeans.
Corn Belt farmers have become used to hearing news about China buying more and more corn and soybeans. For the past year, in particular, that has been good news because the corn market is up 190% and the soybean market is up 172% thanks to China.
But that may soon change.
As the old market adage goes, low prices cure low prices, and high prices cure high prices.
High-priced corn and soybeans are forcing China to look for alternatives, particularly to feed its hogs, which are important to the political tenure of Chinese governmental leaders. China is looking for ways to substitute other grains and cut billions of dollars out of its monthly feed bill.
China may be shifting to feeding wheat to its livestock, which is cheaper than corn and has a protein content that is less than soybean meal, but much higher than the protein content of corn. Domestic corn prices in China remain at a premium to wheat. This is expected to further increase China’s 2020-2021 wheat feed eight-fold.
China is planning to feed nearly 1.5 billion bushels of wheat, which would replace an equivalent amount of corn and 4 million tons of soybean meal.
While corn would remain the primary livestock feed, China may produce enough domestic corn to meet its needs, bolstered by wheat. The soybean meal content of animal rations is falling from 33% to 28% to save money.
China is expected to rely more on rice and wheat stocks in the next season due to the high price of corn. And has even begun importing cheaper US sorghum for hog feed.
That will reduce the demand for US corn and soybeans, and lower market prices.