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Margins could potentially improve even if China’s corn demand weakens

China has a two-way impact on corn farmers. 

Angus Kelly with the National Corn Growers Association tells Brownfield China’s demand for corn this past year was a boon for U.S. farmers, but questions remain on how long it can be sustained.

“China has stockpiled about 50 percent of the world’s grains if you can imagine, and about 69 percent of that is corn alone so they’re sitting on huge inventories, but they need it because of their hog herds,” he explains.

Even if China was to cut last year’s exports by half, Kelly says it’s still more than what the U.S. sends to the second-largest buyer, Mexico.

At the same time, China has essentially banned exports of phosphate which is part of the driver causing record-high inputs for growers.

“A lot of this goes back to during the Trump administration when they imposed Section 301 tariffs, those alone caused China to say, you know what we’re going to keep the phosphate for ourselves and for our own production,” he says.

Kelly says since many inputs are priced on grain prices, if demand weakens, there’s a possibility costs will also decline for farmers which could benefit overall margins.

Brownfield spoke with Kelly during the Great Lakes Crop Summit in Mt. Pleasant, Michigan.