China’s Ag Purchases in 2023
We recently explored whether higher prices or additional quantities drove China’s 2022 record purchases of U.S. ag products. For this Weekly Insights article, we are reviewing the most recent monthly data of 2023 activity.
China purchased $16b worth of U.S. ag products through July for the 2023 calendar year (Figure 1). For context, activity during the first seven months was higher in 2022 ($19.8b) and 2021 ($17.5b). Figure 1 is also a reminder of the seasonality of China’s ag purchases. Non-soybean purchases, which accounted for 56% of total trade in 2022, are pretty consistent from month to month. However, 56% of soybean purchases typically occur between October and December. Another 24% occurs between January and February.
Corn, Soybeans, and Beef
Three specific commodities – corn, soybean, and beef – have captured attention in recent years. Soybeans are always relevant as they account for nearly half of the value of ag exports to China and because U.S. soybeans rely heavily on trade.
Figure 2 shows China’s cumulative purchases of U.S. soybeans. After a solid start, China has purchased 11.4 million metric tons of U.S. soybeans during the 2023 calendar year, the highest activity going back to 2016. We previously noted that bushels of soybeans exported to China in recent years had lagged 2016 and 2017 levels. It’s unclear how 2023 activity will end the year, but China could be on pace to set a new volume record.
After great fanfare and enthusiasm in recent years, U.S. corn exports to China have slowed in 2023. In fact, activity seems to have stalled since May.
In 2022, China’s monthly activity averaged 1.6 million metric tons per month between January and July. In 2023, activity has averaged just 569,000 metric tons per month, roughly one-third of last year’s pace.
While U.S. corn exports to China haven’t been as aggressive in 2023 as observed in late 2020, 2021, or 2022, activity remains considerably higher than pre-2020 levels. The 3.98 million metric tons of corn exported through July is more than double all of the corn exported to China from 2016 through 2019.
Finally, U.S. beef exports to China remain strong (Figure 3). Like corn, China started making new beef purchases in late 2020. While the pace is slower than in 2022 (144,000 metric tons through July 2022 versus 115,000 metric tons through July 2023), China appears to be settling in as a consistent buyer of U.S. beef.
Wrapping It Up
Given the seasonality, the last half of the calendar year always generates uncertainty around China’s purchases. This year, the relevant questions are: 1) how strong fourth-quarter soybean sales will be? And 2) if corn purchases will meaningfully resume.
Overall, activity through July combined with the historic seasonality suggests an annual pace of $35b in 2023. Those levels are consistent with 2021 activity but behind the $40.8b worth of ag purchases made in 2022.