China has 1.4 billion mouths to feed. How vulnerable is it to a global food crisis?
El Nino fears and disruptions to Ukraine’s grain exports are driving up global crop prices, but China’s robust supplies temper the impact
A surge in global agricultural prices has sparked fears of a global food crisis in recent weeks. But China’s limited reliance on staple grain imports and robust domestic reserves should cushion the blow of any external shocks, analysts said, though unpredictable weather, geopolitics and US-China trade tensions could still pose risks.
The assessment comes as Beijing steps up efforts to diversify grain trade with other countries. On Saturday, China and Kazakhstan launched a grain trading platform in Changsha, Hunan province. The head of China’s National Food and Strategic Reserves Administration, Liu Huanxin, said the platform was crucial to ensuring regional food security.
Global grain prices have risen sharply in recent weeks, with Chicago corn, soybean and wheat futures reaching multi-year contract highs in late August and early September, according to CME Group. Meanwhile, the UN Food and Agriculture Organisation’s food price index climbed to 131.1 points in July, its highest level since January 2023.
The rally was driven by a combination of factors. The escalation of the Russia-Ukraine war has disrupted grain exports via the Black Sea, while the US-Israeli war on Iran continues to disrupt shipping through the Strait of Hormuz. An El Nino cycle projected to be one of the strongest in decades has also raised worries over the stability of global grain supplies.
Argus, an international energy and commodity price assessment agency, said disruptions in the Black Sea had been the main driver of the recent rally. Daily exports through Ukrainian ports have plunged to about 20,000 tonnes, down from more than 180,000 tonnes under the former Black Sea Grain Initiative, according to the agency. The initiative began in 2022 to ease grain exports through the sea but collapsed the following year.
The disruptions came during the peak export season from July to September, forcing buyers in Europe, North Africa and the Middle East to seek alternative supplies from North America, South America and Australia, and pushing up prices globally.