Market Morsel: China’s appetite for hoarding.
Yesterday I was asked by a subscriber for a breakdown of stocks of various commodities held in China.
We often discuss wheat and China’s massive stockpiles, but often we neglect discussion of other commodities in our articles.
China is a huge producer and importer of various agricultural commodities. The percentage of global stocks of many commodities is very high and has been growing over the last decade.
I still hold a level of cynicism when it comes to these stocks. There are many questions related to whether these stocks are as high physically as they are on paper.
The data below is collected from the USDA, and is in order from highest to lowest across various significant commodities.
- Corn 68%
- Rice 65%
- Wheat 50%
- Cotton 39%
- Soybeans 35%
- Rapeseed 26%
- Sorghum 7%
- Barley 2%
One concern that we hold of grain stocks is similar to our issue with the Chinese pig herd rebuild (see ‘Why I don’t trust Chinese data on the pig herd rebuild’).
This season China is expected to hold 68% of the worlds corn stocks. Yet, they are also engaging in their most extensive import program on record. This import program has boosted grain pricing in recent months, which has been beneficial, but I question whether such high imports would be required, if stocks were as high.