February 13, 2006

China to be net corn importer by 2007

A booming domestic processing sector as well as the government's efforts to encourage the use of corn in the production of ethanol will make China a net importer of corn in two years, analysts say.

"Our estimate is that China will be a net importer of corn from 2007," said Chen Kang, an analyst with China National Grain and Oils Information Centre (GNGOIC), a unit of the State Grain Administration.

According to CNGOIC estimates, the total domestic consumption of corn in the 2005/06 crop year ending September is expected to reach 130.2 million tonnes, up from 125 million tonnes in the previous year.

That includes 7.3 million tonnes for food, 91 million tonnes for feeds production, and 22 million tonnes for industrial processing including ethanol production, which is up from 18 million last year.

Industrial usage for corn has seen a steady rise in recent years.

Corn consumption in the production of starch, for example, has risen to 13 million tonnes in 2005, from 10 million tonnes in 2003, averaging an annual growth of around 15 percent, according to information provided on the website of Jilin Grains Centre.

On the other hand, production in the current crop year is expected reach 134 million tonnes, increasing by 3 million tonnes from last year. China is also expected to import around 100,000 tonnes of corn this year.

According to CNGOIC, total demand, including that for the proposed exports of 6 million tonnes, however, will be 2.39 million tonnes more than the supply.

"Since 2000, corn stocks have been declining every year, as domestic output (alone) cannot meet the rising demand," Chen said.