China asked food companies to boost supply in fear of second wave of Coronavirus

China has asked trading firms and food processors to boost inventories of grains and oilseeds as a possible second wave of coronavirus cases and worsening infection rates elsewhere raise concerns about global supply lines.

Both state-run and private grain traders as well as food producers were urged to procure higher volumes of soybeans, soyoil and corn during calls with China's Ministry of Commerce in recent days, three trade sources told Reuters.

"There is a possibility of a breakdown in supply pipelines due to the coronavirus infections. For example, a port of origin or destination might shut down," said a senior trader at one of China's leading food processors, which was on a call last week with authorities to discuss purchases.

"They have advised us to increase stocks, keep supplies higher than we usually have. Things are not looking good in Brazil," he added, referring to China's main supplier of soybeans and a key meat exporter where the number of coronavirus cases has surpassed those in Spain and Italy.

A second source in China who was briefed by a person who attended one of the meetings said China's Ministry of Commerce met with some state companies on Tuesday to discuss how to guarantee supplies during the pandemic.

"One of the main concerns is how the epidemic in South America might impact supplies (of beans) to China," the source said.

China's Ministry of Commerce did not respond to a fax seeking comments on plans to increase food stocks.

Brazilian shipments of soybeans were delayed in March and April due to a combination of heavy rains and reduced manpower as coronavirus containment measures took effect, leading to a plunge in Chinese soy inventories to record lows.

Arrivals from Brazil have since rebounded, but authorities remain wary of fresh disruptions.

China's state-possessed agribusiness



combination COFCO and grain stockpiler Sinograin have been venturing up acquisition of U.S. soybeans and corn lately. 

Chinese shippers purchased in any event four cargoes, or around 240,000 tons, of U.S. soybeans on Monday for shipment starting in July, two brokers acquainted with the arrangements said. 

Beijing has likewise expanded its allotments of yield import amounts to significant grain purchasers, preparing for additional potential buys. 

China is feeling the squeeze to purchase more U.S. ranch items under an exchange accord marked among Washington and Beijing in January, and exchange sources hope for something else of China's yields to originate from the United States once the South American fare season closes and the North American harvests approach in the fall.

"The effort is to build supplies, not just from Brazil, but from all over," said the senior trader at the food processing company. "U.S. beans are looking attractive from September onwards," he added.

U.S. crop export sales data show that Chinese buyers have accelerated soybean purchases of the upcoming crop, with new crop bookings of 374,000 tonnes already registered, compared with an average of 60,000 tonnes for this period since 2016.

China is also a top meat importer and is facing a large domestic supply shortfall following an outbreak of African swine fever which has decimated its pig herd, the world's largest.

Imports from the United States - the top global pork exporter - had been expected to surge as a result, but widespread COVID-19 outbreaks at U.S. slaughterhouses and processing plants have cut national meat output.

China has booked a record volume of U.S. pork shipments already this year, raising concerns about fresh tensions between the countries if U.S. meat production problems curb domestic supplies at a time when shipments to China remain strong.