February 25, 2011

 

Corn leads China's January grain import decline

 

China's grain imports slowed in January, largely as expected due to a seasonal decline in demand, with corn imports leading the slowdown, customs data showed Thursday (Feb 24).

 

The government targets self-sufficiency in grains, but drought conditions and rising demand have raised the likelihood that grain imports will increase in the months ahead.

 

Still, January's data showed the appetite for imports is not immune from seasonal effects.

 

China imported 1,878 tonnes of corn in January, down 84% compared with a year earlier, data from the General Administration of Customs showed.

 

Wheat imports fell 31% to 59,314 tonnes, while rice imports were down 12% to 55,512 tonnes, customs said.

 

However, imports of soy - not categorised as a grain and used mostly for production of locally consumed feedmeal and edible oil - continued to boom, up 26% from a year earlier.

 

Soyoil imports, freed up after China ended a spat with major supplier Argentina late last year, more than doubled, soaring 122% from January of last year, as soyoil is in heavy demand during the Lunar New Year season.

 

Corn, however, is not. "Corn processors usually suspend work ahead of the Lunar New Year, and grain imports are traditionally weak during the start of the year," analysts said.

 

Corn's decline last month was striking because in 2010, China imported 1.6 million tonnes of corn, up 18-fold from 2009. The sharply higher volume, mostly from the US, broke China's 15-year run of largely maintaining self-sufficiency in corn supplies.

 

However, it wasn't until May last year that China began to aggressively step up corn imports, turning into a net importer in that month and remaining one since. Corn exports last month were just 655 tonnes, down 98% from a year earlier.

 

China also reported in December that the 2010 corn harvest was a strong 172 million tonnes, reinforcing confidence among purchasers that they would not have to turn to imports for at least the short term.

 

Buying this year has also slowed as global corn prices reached their highest levels in more than two years.

 

Depending on how deeply an ongoing drought cuts into wheat supply, however, China's grain imports may still rise in the year ahead. Chinese buyers are said to be in talks with Australian feed-grade wheat suppliers over large orders.

 

Analysts have projected that rising feed demand may prompt more corn orders this year, with estimates around 1-2 million tonnes.