TOKYO - - Corn prices have risen substantially over the past year as China's pork industry recovers from an outbreak of African swine fever that forced farmers to cull much of their pig herds.
Corn futures in the Chicago Mercantile Exchange recently hovered over $5 per bushel. While the price is down 30% from a peak in early May, when poor weather raised concerns about a poor harvest in the U.S., it is still about 30% higher than a year earlier.
The rise since last year reflects a jump in demand for feed corn in China, the world's top producer and consumer of pork. However, higher prices put a heavier burden on farmers and meat producers around the world, particularly in import-dependent markets like Japan, which has more than 70 percent of its feed imported from abroad.
The size of China's swine herds -, which had reached more than 400 million before African swine fever began spreading throughout the country in 2018 - had fallen dramatically as the industry was forced to cull pigs to curb the spread of disease.
The new demand has driven the price of pork to a 10 year high of 58.9 yuan $9.15, according to the Ministry of Agriculture and Rural Affairs, in February 2020.
President Xi Jinping responded to a risk of public anger if it did not act to bring down the cost of a dinner buffet staple - with financial support for pork producers, including financial assistance to cover the cost of raising pigs.
Herds have returned to pre-swine fever numbers now, and pork prices have largely dropped since early this year. The 1,2 yuan price marked in September was down to its levels before swine fever, a representative at a major trading house said.
Prices are getting closer to the normal price of 15 to 20 yuan from around 2000 to 2018, according to Akio Shibata, president of Japan's Natural Resource Research Institute (CNR)
The recovery of the swine population sped up the shakeup in the pig industry. When micro to small players were driven out, it caused room for bigger competitors to expand.
Top names like Muyuan Foods and Wens Foodstuff Group launched large-scale breeding plans to increase market share. Large businesses and organizations have the capital for disease prevention programs.
Unlike big breeders, some of whom are thought to use leftover food as feed, small breeders use corn and soy meal to fatten pigs. The high number of pigs drove up demand for corn.
According to the United States Department of Agriculture, China imports of corn grew 3.7 times on the year 2020-21, making China the top importer. Chinese customs figures show the import volume nearly quadrupling over the year during January-August period.
Corn demand appears resilient for at least medium term. China, the world's third-leading grower of the crop, has covered most of its domestic consumption.
China is reportedly aiming to self-sufficiency in corn. But Arlan Suderman, Chief Commodities Researcher at StoneX Group, estimated the real-world ceiling at 85% at an U.S. Grains Council event this September.
An increase in Chinese imports will put upward pressure on the international prices, which will further affect feed traders and farmers in neighboring countries.
The U.S. and China resumed cabinet-level talks online earlier this month. They decided to discuss outstanding issues based on the phase one deal of early 2020, according to a readout from the Office of the U.S. Trade Representative. China had pledged to raise imports of American agricultural goods.
Assuming that Sino-American relations do not collapse dramatically, it's conceivable that the Chinese import of U.S. grain and other agricultural products will grow steadily, said Ruan Wei, chief researcher at the Norinchukin Research Institute in Tokyo.